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and cooperate fully with respondent’s reasonable requests.
Petitioners therefore bear the burden of proof.
I. Unreported Income
Section 61 provides that “gross income means all income from
whatever source derived”. The Supreme Court has held that gross
income includes all “‘accessions to wealth, clearly realized, and
over which the taxpayers have complete dominion.’”4 James v.
United States, 366 U.S. 213, 219 (1961) (quoting Commissioner v.
Glenshaw Glass Co., 348 U.S. 426, 431 (1955)). A taxpayer has
dominion and control over cash when he has the freedom to use it
at will, even though that freedom may be assailable by persons
with better title. Rutkin v. United States, 343 U.S. 130, 137
(1952); Ianniello v. Commissioner, 98 T.C. 165, 173 (1992).
Petitioner does not dispute that she was a beneficiary of
Mrs. Knight’s annuity contract. Nor does petitioner dispute that
a total of $415,266 was deposited into an account over which she
had signature authority. Accordingly, petitioner had dominion
4 Sec. 101(a)(1) provides that gross income does not include
the proceeds of a life insurance contract paid by reason of the
death of the insured, subject to certain limitations. See sec.
101(c), (f). Respondent contends that the $53,885 of annuity
proceeds and the $1,136 of interest income are taxable.
Petitioners do not dispute the taxability of these amounts;
rather, petitioners believe they should not be liable for the tax
because they did not receive the benefit of the annuity proceeds
or interest income. We therefore limit our discussion to whether
petitioners had dominion and control over the amounts at issue,
and whether petitioners are entitled to a deduction under sec.
165(a), discussed infra.
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