t c memo united_states tax_court bestate of frank johnson deceased larry t johnson personal representative and estate of katharine johnson deceased larry t johnson personal representative et al petitioners v commissioner of internal revenue respondent docket nos filed date kenneth b wheeler for petitioners james f kearney for respondent ' cases of the following petitioners are consolidated herewith estate of frank johnson deceased kt al docket no larry t johnson transferee docket no sylvia johnson transferee docket no and ronnie johnson transferee docket no contents findings_of_fact ce cw ce ec ew ew ee tw tt ew tw et we tw tee i facts relating to issues involving deficiencies a background cc cc cc cc ee ee ee eee ee ee eee b tax reeturn sec_2 cc ee ce ec ee ew we tw et wwe eee w sec_1 frank and katherine’s returns 22-eee200- larry’s return sec_2 ee eee ee et ee te te ne ronnie’s retcurn sec_2 cece cece ec eee wwe ee wee eee nece sec_4 sylvia’s return sec_2 ee ee ee et et te c irs audits and notices of deficiency frank and katherine’s audit and notices of deficiency eee ec ee ee ee ee tt et et e sec_2 larry’s audit and notice_of_deficiency ronnie’s audit and notice_of_deficiency sylvia’s audit and notice_of_deficiency d source and application of funds analyses bf cash hoard we cee ee ccc cc eee ww we ee tt wt eee tw wee ef other facts we cee eee ccc eee ee wee ee ee wt eee te tne g capital_gain for le eee ee ee et eee il facts relating to issues involving transferee_liability cece eww cece ecw ce ew eee wee ewe ee eee ewe ee eee ees a lally 2c cece ew eee ew ew ew eee ew ee ee we we ee eee ee ewe wee wees be romnle lecce ccc ec eee wee ewe ee wee twee eee ee te ee eee eee cw syllvviad lo ce et ee et te ee eee tee d specific transfers eee ee et et et tte u s savings bonds eee eee ee ee eee ee eee account at glendale federal savings and loan longwood property cece ee ee ee eee eee et tee ee ee port st lucie property eee ee ee ee ee ee automobiles le ecw eww ee wee wee ewe ee we ee eee eee opinion ec ec ew tw we we ee we te eet tt te ee i issues relating to deficiencies ee ee ee ee ee eee ee a background cc cc cc cc ee ee ee eee ee ee eee b statute_of_limitations and fraud issues in general le eee ec we ew we et ee et te ee sec_2 flauud cece ccc ec cee ee eee ee ee wee ew eee we ee wee ewe eens a existence of an underpayment likely sources of income nontaxable source eee ee ee ee eee eee ewes summary relating to existence of an underpayment b intent to evade taxe s eee eee ee eee ee eee hooaywo pattern of unreporting substantial amount of income eee ee ee cee lack of record sec_2 eee ee ee ee we et we ew sec_65 failing history eee ec ee eee ee ee eee dealings in cash ee eee eee eee concealing transactions failure to cooperate with respondent credibility of witnesses level of education age and state of health we eee eee ew ee ew te eee summary regarding intent c conclusion regarding fraud and statute of limmitations weve eww ee cw ec wwe ewe ee wee nece sec_73 amount of understatement of income adjustments to bls figures eee enna adjustment for specific gift -0226- adjustment for proceeds of automobile tyansacelons levee eee ee ew eee wee twee eee wee tween sec_80 adjustment for larry’s audit results adjustment for sylvia’s gambling expenditure sec_2 ec ee ee te te ee et eee additional items identified as in dispute a withholding on gambling winnings b birthing costs for nicole c estimated_tax payments - -e-008- d tax payment eee ce ee ee te ee ee ee e wedding ceremony for sylvia f detective expense s ee ee ee ee ee ee ee sec_87 g janie’s living_expenses h duplications regarding johnson limousine other adjustment sec_2 ee ee ee tt te a rental income ce eee ee ee te tw ee b duplication of rental expenses and mortgage payments 2c eee ee eeee cc depreciation eee eee ee ee et ee ee d cash and jewelry eee ec ce ee ee eee ee eee summary relating to amount of understatement of income eee ee eee ee we ew eet we et ee tes capital_gain for wee eee ee ee ee et es taxable social_security_benefits self-employment taxe sec_2 ce ee ee ee et te ee self-employment deduction eee eee eee eee married couples deduction ee eee ee ee ee ee additions to tax and penalties sec_6653 and sec_6663 cee eee ee ew eee we sec_6661 eee et wt wwe et tw t sec_102 il iss a b c appendix appendix appendix appendix appendix appendix appendix appendix appendix appendix appendix appendix appendix appendix ues relating to transferee_liability background ee ee tt te ee ete te teen sec_104 florida’s statutory provisions eee eee pre-1988 transfers ee ee et et ee post-1987 transfer sec_2 ee ee et ee discussion le eee ec ee et ee ee te ee ete te et ee sec_111 dc ce ce ee we eee ee eee ee ee eee eee ee eee eee ee tee sec_118 or d ccc cc ecw ce ee we te ee ee ee ee eee ee et eee eee ee eee bc cc ew ee ee ee ee te ee ee ee eee eee te eee ee eee foc ce ew ee te ee eee ee ee ee eee ee te tee ee eee goce ccc cee ee cee ee eee eee eee ee ee ee ee ee ee ee ee eee eee a a kc cc cc ce ce we ee ee ee eee te ee eee ee eee eee ee te tee loc ce ce ee we ee ee ee ee ee ee ee ee eee eee ee tens a n cece cc ee ce eee ee ee ee ee eee eee eee ee ee ee eee eee ee eee memorandum findings_of_fact and opinion halpern judge these five cases have been consolidated for trial briefing and opinion respondent by two notices of deficiency dated date determined deficiencies additions and penalties with respect to federal income taxes owed by petitioners the estate of frank johnson larry t johnson personal representative and the estate of katherine johnson larry t johnson personal representative hereinafter referred to as petitioners such deficiencies additions and penalties are on account of returns of income_tax made by frank and katherine johnson sometimes decedents and are as follows additions to tax and penalties sec sec sec sec docket sec sec no year deficiency b b b a b b dollar_figure dollar_figure t - - - dollar_figure big_number big_number - - big_number big_number big_number - - - big_number big_number - - dollar_figure - big_number - - - big_number big_number big_number - - - - big_number big_number - - - - dollar_figure - big_number - - - - big_number - '50 percent of the interest due on dollar_figure percent of the interest due on dollar_figure percent of the interest due on dollar_figure percent of the interest due on dollar_figure percent of the interest due on dollar_figure by notices of liability dated date respondent asserted transferee_liability against the following petitioners relating to the above deficiencies additions to tax and -- - penalties to the extent of the net value of assets they purportedly received from decedents as follows docket net value of no transferee assets asserted larry t johnson dollar_figure sylvia johnson big_number ronnie johnson big_number the issues for decision are as follows whether the statute_of_limitations bars assessment of the deficiencies for each of the years in issue whether decedents understated their income for each of the years in issue whether decedents’ capital_gain income should be increased for whether decedents’ taxable social_security income should be increased for each of the years through whether decedents’ self-employment taxes under sec_1401 should be increased for each of the years in issue a transferee’s liability generally is limited to the value of the assets received from the transferor see 100_tc_180 n respondent also identifies as an issue the question of whether decedents’ capital_gain income for should be increased we assume that respondent meant inasmuch as respondent made a dollar_figure adjustment to capital_gain income for that year but no adjustment to capital_gain income for in their briefs petitioners do not address the issue of capital_gain income for either or accordingly we deem that issue conceded by them see rule e and 92_tc_661 89_tc_46 - whether decedents may increase their self-employment_tax deduction for whether decedents are entitled to a married couples deduction for each of the years and whether decedents are liable for the additions to tax or penalties for fraud under sec_6653 or sec_6663 as applicable for each of the years in issue whether decedents are liable for additions to tax under sec_6661 for substantial_understatement of income for each of the years through whether petitioner larry johnson is liable as a transferee of frank and katherine johnson for dollar_figure whether petitioner sylvia johnson is liable as a transferee of frank and katherine johnson for dollar_figure whether petitioner ronnie johnson is liable as a transferee of frank and katherine johnson for dollar_figure unless otherwise noted all section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure for convenience monetary amounts have been rounded to the nearest dollar references to cash include cash equivalents such as cashier’s checks and money orders - - findings_of_fact some of the facts have been stipulated and are so found the stipulation of facts amendment to stipulation of facts first supplemental stipulation of facts and second supplemental stipulation of facts filed by the parties together with the exhibits attached thereto are incorporated herein by this reference some of respondent’s proposed findings_of_fact have been conceded by petitioners and accordingly they are so found some of petitioners’ proposed findings_of_fact have been conceded by respondent and accordingly they are so found petitioner larry johnson larry is here in his own right in docket no and also as personal representative of the estates of both frank t and katherine johnson he resided in longwood florida when he filed the petitions in his case and in petitioners’ cases petitioner ronnie johnson ronnie resided in longwood florida when he filed the petition in his case petitioner sylvia johnson sylvia resided in longwood florida when she filed the petition in her case it facts relating to issues involving deficiencies a background frank johnson frank was born on date katherine stanton johnson katherine was born on date they were raised in the gypsy culture custom and tradition frank and katherine married in the gypsy custom - around they moved to florida during the late 1960s during the years in issue frank and katherine lived in a house located in longwood florida longwood property frank died at the age of on date katherine died at the age of on date frank and katherine had one son larry and two daughters patricia and janie at the time of trial larry had seven children among whom are ronnie and sylvia in addition to their own children frank and katherine raised ronnie and sylvia grandchildren in the gypsy culture custom and tradition hereinafter reference to the johnson family means frank katherine larry ronnie and sylvia collectively during the years in issue larry was married to nancy johnson nancy they lived in a separate residence from katherine and frank during those years ronnie lived with frank and katherine until approximately date during through ronnie was married to linda johnson linda and they lived in a separate residence from frank and katherine sylvia came to live with frank and katherine at least by her boyfriend jack miller moved into the longwood property in late sylvia and jack miller married in and their child nicole was born in sylvia jack miller and nicole lived in the longwood property until date when they moved into a separate residence while living with frank and katherine sylvia performed many services for them including grocery shopping paying bills and accompanying them to their doctors’ offices when her help was needed she assisted katherine in getting out of bed bathing and dressing in june or date katherine hired carolyn white carolyn to perform housekeeping and caregiver duties for katherine and frank carolyn’s husband jack white burglarized the longwood property in date and stole a safe which he claimed contained dollar_figure in cash together with jewelry bank books stocks bonds and coins frank and katherine reported to the police the theft of dollar_figure in cash and over dollar_figure in jewelry the police subsequently recovered the jewelry and all but dollar_figure of the cash jack white was convicted of the theft carolyn pleaded guilty to being an accessory after the fact and was put on probation for years b tax_return sec_1 frank and katherine’s returns frank was retired during the years in issue before during and after the years in issue katherine operated a palmistry business out of the longwood property under the name madame katherine for some of the years sylvia helped katherine in that palmistry business - frank and katherine filed timely joint federal individual income_tax returns for through they filed late returns for and on date after internal_revenue_service irs revenue_officer robert budde revenue_officer budde served a summons requesting information needed to prepare delinquent tax returns for through frank and katherine filed timely joint federal individual income_tax returns for and on their returns for the years in issue frank and katherine claimed exemptions for themselves and no exemptions for dependents on schedules c profit or loss from business filed with the returns for through and for frank and katherine reported the following gross_receipts expenses and net_income from the palmistry business gross business net year receipts deductions income dollar_figure dollar_figure sbig_number big_number big_number big_number big_number big_number big_number big_number big_number frank and katherine did not file any schedules c with the returns for through business deductions claimed on the the schedules c filed with the through returns listed frank and katherine as the proprietors of the business but the form se computation of social_security_self-employment_tax identified katherine as the self-employed_person the schedule c filed with the return listed frank as the proprietor of the business no form se was included with the copy of the return admitted into evidence at the trial -- schedules c for and included advertising expenses of dollar_figure dollar_figure and dollar_figure respectively the schedule c filed with the return reported no advertising expenses from through katherine’s advertising expenses included the cost of a television t v commercial that katherine had taped on date for viewing on fox tv channel miss lisa ruby began managing katherine’s tv ad account in late and thereafter she periodically visited with katherine at the longwood property to discuss that account and collect payment katherine’s tv advertising expenses averaged approximately dollar_figure per year which she always paid with cash on their returns for the years in issue frank and katherine reported the following interest_income income from capital_gains income from gambling and adjusted_gross_income katherine continued to use the television commercial after income from income adjusted interest capital from gross year income gains gambling income dollar_figure - - dollar_figure - - big_number dollar_figure - big_number - - big_number - - big_number big_number - - big_number big_number big_number dollar_figure big_number big_number - big_number big_number they also reported total social_security_benefits received for and of dollar_figure and dollar_figure respectively none of it taxable frank and katherine’s returns for the years in issue were prepared by their accountant jack baptiste baptiste he prepared the returns on the basis of information they furnished to him larry’s returns larry and nancy filed joint federal individual income_tax returns for each of the years in issue for through larry and nancy claimed exemptions for themselves and for three dependent_children living with them sylvia tony and david for through they claimed exemptions for themselves and for two dependent_children living with them tony and david katherine trained nancy to read palms larry and nancy filed schedules c with their returns for the years in issue reporting income from a palmistry business the schedules c for the years in issue reported the following gross_receipts expenses and net_income from the palmistry business gross business net year receipts deductions income dollar_figure dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number on their returns for the years in issue larry and nancy reported the following interest_income schedule e supplemental income and loss income or loss ’ income from capital_gains income from gambling miscellaneous income and adjusted_gross_income the schedule c for listed larry and nancy as the proprietors of the palmistry business and the schedule se self- employment_tax identified larry and nancy as the self-employed persons the schedules c for through listed larry as the proprietor and the schedules se for and through identified larry as the self-employed_person no schedule se was included with the copy of the return admitted into evidence at trial the schedules c for through showed a business name for the palmistry business of madam nancy the schedule c for did not show a business name the schedules c for through showed a business name of madam bessie larry testified at trial that he did not actively participate in the palmistry business operated by nancy ’ for through the schedules e reported losses from rentals the net_loss for also included a loss from johnson’s limousine service inc an s_corporation -- - income from income adjusted interest sch e capital from misc gross year income loss gains gambling income income dollar_figure - - dollar_figure - dollar_figure dollar_figure - - - big_number - big_number - big_number big_number - - - big_number big_number - - - big_number big_number - - - big_number big_number big_number - - - big_number big_number ' big_number dollar_figure - dollar_figure big_number dollar_figure of the schedule e loss for was from johnson’s limousine service inc ronnie’s returns ronnie and linda filed joint federal individual income_tax returns for through ronnie and linda claimed exemptions for themselves and no exemptions for dependents on those returns the return was the first tax_return ronnie filed ronnie and linda filed schedules c with their returns the schedules c reporting income from a palmistry business reported the following gross_receipts expenses and net_income from the palmistry business the schedule c for listed ronnie as the proprietor of the palmistry business and the schedule se identified ronnie as the self-employed_person the schedules c for through listed ronnie and linda as the proprietors and they filed separate schedules se for each of those years on which the schedule c income was divided equally between ronnie and linda no business name was given for the palmistry business on any of the schedules c ronnie did not testify at trial -- - gross business net year receipts deductions income dollar_figure dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number on their returns for through ronnie and linda reported the following interest_income schedule e loss income from gambling and adjusted_gross_income income adjusted interest rental from gross year income loss gambling income - - - dollar_figure - - - big_number sec_77 - dollar_figure big_number - - - big_number - - big_number ' dollar_figure - big_number ‘the schedule e loss was from johnson’s limousine service inc sylvia’s returns katherine also trained sylvia to read palms at least by sylvia worked with katherine at the longwood property in katherine’s palmistry business for through sylvia reported income from a palmistry business’ under the name madame sylvia on schedules c she filed with her returns the return was the first federal individual_income_tax_return sylvia filed on that return she filed as single and until date sylvia operated her palmistry business out of the longwood property - claimed an exemption for herself and no exemptions for dependents for she filed as head_of_household and claimed an exemption for herself and an exemption for a dependent_child nicole johnson sylvia and jack miller filed joint federal individual income_tax returns for and they claimed exemptions for themselves and an exemption for a dependent_child katherine n johnson for through sylvia reported the following income expenses and net profit from her palmistry business on schedules c gross business net year receipts deductions income dollar_figure dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number ‘the face of the form_1040 shows business income from schedule c of dollar_figure no explanation is given for the discrepancy on the schedules c sylvia claimed rent expenses of dollar_figure for through and dollar_figure for frank and katherine did not report any rental income on their federal individual income_tax returns for through on the schedules c sylvia claimed advertising expenses of dollar_figure for dollar_figure for dollar_figure for and dollar_figure for on the returns for through sylvia or sylvia and jack miller reported the following interest_income schedule e loss income from gambling and adjusted_gross_income income adjusted interest sch e from gross year income loss gambling income - - - dollar_figure dollar_figure - dollar_figure big_number - - big_number dollar_figure big_number big_number ‘the schedule e loss was from johnson’s limousine service inc cc trs audits and notices of deficiency frank and katherine’s audit and notices of deficiency on date irs revenue_agent robert combs agent combs notified frank and katherine that their returns for the years in issue were under audit ’ agent combs did not meet with frank or katherine regarding income and expense items pertaining to their returns at any time during the course of the audit of their tax returns for the years in issue on date respondent mailed 30-day letters to frank and katherine for through in which respondent proposed adjustments for those years relating among other things to understatements of income subsequently on date respondent issued two notices of deficiency to petitioners for the years in issue in which respondent determined among on date agent combs had notified larry and nancy that their federal_income_tax return was under audit subsegquently agent combs expanded the audit to include additional years and family members other things that frank and katherine had unreported other income for those years in the following amounts other income year frank katherine total dollar_figure dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number total big_number big_number big_number respondent calculated the amount of unreported other income using a source_and_application_of_funds_method of reconstructing income in the notices of deficiency respondent determined further that frank and katherine together had taxable social_security_benefits of dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure and dollar_figure for years and respectively in addition respondent increased frank’s and katherine’s income from capital_gains for and by dollar_figure and dollar_figure respectively for the years in issue respondent treated frank and katherine as co-owners of the palmistry business thus respondent determined that they each were liable for self- employment_taxes for and of dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure ‘t for those years respondent determined that frank and katherine had received total social_security_benefits of dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure and dollar_figure respectively - - dollar_figure and dollar_figure respectively respondent allowed them a dollar_figure self-employment_tax deduction for for each of the years through respondent also allowed frank and katherine a dollar_figure married couples deduction larry’s audit and notice_of_deficiency agent combs met with larry nancy and baptiste in date regarding the audit of larry and nancy’s return he subsequently expanded the audit to include their returns for earlier and later years as well as the returns of frank and katherine ronnie and sylvia larry and nancy initially provided information to agent combs relating to amounts claimed on their returns subseguently they refused agent combs’ requests for additional information and for an extension of the statute_of_limitations for the return larry and baptiste refused to cooperate further in the audit on the advice of counsel because they believed that agent combs was prejudiced against gypsies and had referred or intended to refer their returns to the irs criminal_investigation_division during respondent made a jeopardy_assessment against larry and nancy after agent combs received information from the daytona beach shores police department that both larry and his daughter sylvia had obtained driver’s licenses issued in false names and had opened safe deposit boxes under those names into which they were transferring moneys from other safe deposit - boxes respondent seized property from larry’s home on date and from katherine’s home on date larry and nancy filed an administrative protest on date in which they requested abatement of the jeopardy_assessment respondent abated the jeopardy_assessment on or about date but imposed an egquitable lien on larry’s real_property on date respondent mailed a notice_of_deficiency to larry and nancy for the years through respondent determined the deficiencies set forth in that notice_of_deficiency on the basis of a source and application of funds analysis for each of those years on date larry and nancy filed a petition with the tax_court seeking a redetermination of those deficiencies docket no respondent larry and nancy subsequently settled docket no the decision document entered date reflected among other things that no deficiencies in tax were due for the years through no additions to tax were due for the years through deficiencies in tax were due for years and in the amounts of dollar_figure and dollar_figure respectively ’ additions to tax were due for year sec_12 in the notice_of_deficiency respondent determined tax deficiencies for and of dollar_figure and dollar_figure respectively those deficiencies were calculated on the basis of the following adjustments to income continued - and in the amounts of dollar_figure and dollar_figure respectively and the settlement was based on the assertions of both larry and katherine that for the years in issue frank and katherine had paid all of larry’s expenditures in excess of his income ronnie’s audit and notice_of_deficiency agent combs notified ronnie and linda of the audit of their returns on date on date respondent mailed 30-day letters to ronnie for and and to ronnie and linda for though in which respondent proposed adjustments for those years respondent determined those adjustments on the basis of a source and application of funds analysis for each of those years subsequently respondent closed ronnie’s audit without issuing any notice_of_deficiency sylvia’s audit and notice_of_deficiency agent combs notified sylvia of the audit of her returns on date on date respondent mailed 30-day letters to sylvia for through and to sylvia and jack for and in which respondent proposed adjustments for continued self-employment_income dollar_figure dollar_figure capital_gain income -q- big_number loss from an s_corporation -q- big_number depreciation expense - schedule c big_number big_number depreciation expense - schedule e big_number big_number self-employment_tax deduction -0- big_number total adjustments big_number big_number - - those years respondent determined those adjustments on the basis of a source and application of funds analysis for each of those years subsequently respondent closed sylvia’s audit without issuing a notice_of_deficiency d source and application of funds analyses following trial the parties met in an effort to resolve their differences regarding the source and application of funds analyses for the johnson family members ina joint finding of fact set forth in their opening briefs the parties indicate that appendix of respondent’s opening brief shows in black the items of the source and application of funds analyses for which the parties are in agreement and that appendix shows in red the items for which the parties are not in agreement we show the items reflected on respondent’s appendix in our appendices a through i to the extent possible in those appendices we have incorporated explanations for the differences in amounts reflected on the source and application of funds analyses for frank and katherine as gifts to larry ronnie and sylvia from the amounts reflected as excess applications of funds over sources of funds on the separate source and application of funds analyses for larry ronnie and sylvia except for the items specified below the parties agree on the amounts shown in source and application of funds analyses set forth infra in appendix a items in gifts to gifts to personal less dispute larry ronnie living housing vehicle expenses for persons costs acquisition costs total of items in dispute for ttems in dispute gifts to gifts to personal less larry ronnie living housing vehicle expenses for persons costs acquisition costs total of items in dispute for ‘respondent concedes that this item is overstated by dollar_figure dollar_figure big_number dollar_figure amount dollar_figure big_number big_number big_number big_number amount big_number big_number big_number big_number big_number see infra appendix c for an explanation of the difference items in gifts to gifts to gifts to personal less dispute larry ronnie sylvia living housing vehicle expenses for persons costs acquisition costs total of items in dispute for ttems in dispute gifts to gifts to gifts to personal less larry ronnie sylvia living housing vehicle expenses for persons costs acquisition costs total of items in dispute for ‘larry’s analysis reflects dollar_figure for an explanation of the difference dollar_figure big_number dollar_figure big_number see amount dollar_figure big_number big_number big_number big_number amount 1dollar_figure big_number big_number big_number big_number infra appendix e - - ronnie’s analysis reflects dollar_figure see infra appendix e for an explanation of the difference items in dispute amount gifts to larry dollar_figure gifts to ronnie big_number gifts to sylvia big_number personal living_expenses for persons big_number less housing costs dollar_figure vehicle acquisition costs big_number big_number total of items in dispute for big_number ‘appendix ronnie reflects dollar_figure see infra appendix f for an explanation of the difference items in dispute amount gifts to larry dollar_figure gifts to ronnie big_number gifts to sylvia big_number personal living_expenses for persons big_number less housing costs dollar_figure vehicle acquisition costs big_number big_number total of items in dispute for big_number ‘larry’s analysis reflects dollar_figure see infra appendix g for an explanation of the difference 7ronnie’s analysis reflects dollar_figure see infra appendix g for an explanation of the difference items in dispute amount gifts to larry dollar_figure gifts to ronnie big_number gifts to sylvia big_number personal living_expenses for persons big_number less housing costs dollar_figure vehicle acquisition costs big_number big_number wedding ceremony for sylvia total of items in dispute for big_number items in dispute amount gifts to larry ‘dollar_figure gifts to ronnie big_number gifts to sylvia big_number personal living_expenses for persons big_number less housing costs dollar_figure vehicle acquisition costs big_number big_number investigative fees dennis dayle big_number room board for janie and her children big_number less duplication re limo total of items in dispute for big_number ‘larry’s analysis reflects dollar_figure see infra appendix i for an explanation of the difference ronnie’s analysis reflects dollar_figure see infra appendix i for an explanation of the difference sylvia’s analysis reflects dollar_figure see infra appendix i for an explanation of the difference included in the source and application of funds analysis for frank and katherine for each of the years in issue are amounts identified as gifts to larry ronnie and sylvia for the most part those amounts constitute the excess of applications of funds over sources of funds reflected on source and application of funds analyses respondent performed for each of larry ronnie and sylvia see infra appendices b through i respondent included those amounts as applications of funds for frank and katherine because in a deposition to preserve testimony for docket no given on date katherine claimed that she and frank provided funds for purchases of assets by larry ronnie and sylvia as well as for their vacations and normal living_expenses in excess of their incomes in separate sworn affidavits larry ronnie and sylvia attested that o7 - katherine and frank had provided funds for their asset purchases and living_expenses for purposes of the source and application of funds analyses for each year to determine personal living_expenses for frank and katherine’s household larry’s household ronnie’s household and sylvia’s household respondent used bureau of labor statistics bls figures which detailed average annual expenditures of consumers based on the size of the consumer unit respondent reduced the bls figures for shelter costs and vehicle acquisition costs respondent considered frank and katherine’s household to consist only of themselves for each year in issue respondent considered larry’s household to consist of four persons for each year in issue respondent considered ronnie’s household to consist of one person for and and two persons for through respondent considered sylvia’s household to consist of one person for through two persons for and three persons for and see infra appendices a through i for the amounts respondent used for personal living_expenses in the source and application of funds analyses - during larry purchased a excaliber for dollar_figure frank and katherine paid for the birthing costs of sylvia’s daughter nicole respondent estimated those costs to be dollar_figure sometime during the years in issue frank and katherine’s daughter janie was married to miller johnson miller janie suspected that miller stole property from her safe deposit box during janie and frank hired a private investigator denis dayle dayle to help recover the stolen property and to hide janie and her children from miller shortly before they hired dayle miller had hired dayle to find janie and her children dayle decided to keep miller as a client while at the same time he worked for janie and frank frank paid dayle dollar_figure in for his services ef cash hoard katherine was the eldest child of edward peter stanton edward and mary stephens stanton mary in addition to katherine edward and mary had nine other children including a daughter tina stanton ephraim tina and sons joe mills joe ‘3 that acquisition is not reflected on frank and katherine’s or larry’s source and application of funds analyses for see infra apps a and f the parties do not explain why it was omitted as an application of funds for that year we have made no adjustment for this item in our findings regarding unreported income since it was not identified as an item in dispute joe actually was edward’s stepson it is not clear from the record whether katherine tina and their sister margie continued - jack stanton jack duyo peter stanton sometimes referred to as dewey and chuck stanton chuck tina’s husband is frank’s half-brother for most of his life edward worked as a coppersmith and welder until around edward and his family moved from job site to job site approximately every week to days ’ his family lived in tents and later in trailers around edward mary and the children remaining at home settled in maryland first in the emmitsburg area and later in the hagerstown area ’ while living in maryland edward purchased some real_estate including a trailer park some apartment buildings and a lot on which he built a home edward also bought and sold some livestock edward and mary did not trust banks they kept cash as well as gold coins and jewelry hidden in their home although edward generally lived frugally on occasion he helped his children out m4 continued actually were mary’s stepdaughters although certain statements in the record give that impression 's joe testified that for some of those years edward and his family traveled with a carnival at which mary worked as a fortune teller 1e although the testimony is somewhat contradictory as to exactly which of edward and mary’s children were living with them when mary and edward settled in maryland it is clear that both katherine and tina already were married and living in separate residences while chuck and possibly dewey were living with their parents at that time -- - financially especially chuck and katherine at times edward asked katherine or tina for money to pay some of his or mary’s living_expenses the records of the social_security administration reflect the following earnings reported for edward over his lifetime period amount to cumulative dollar_figure through -q- through -0- big_number through -0- total big_number mary worked as a fortune teller both before and after the family settled in maryland however the social_security administration has no record of any earnings reported for mary respondent has no record showing that mary or edward filed any federal_income_tax returns dewey was born on date during his lifetime dewey was involved in at least two serious automobile accidents the first accident occurred on or about date dewey his wife helen and their son michael were injured in that accident and dewey’s car was destroyed they filed a law suit against the driver of the tractor trailer which struck their car and the driver’s employer the case was subsequently settled before trial and some time thereafter the following settlement amounts were paid to or for dewey helen and michael beneficiary amount helen stanton dollar_figure michael stanton big_number bobby stanton ’ total big_number ‘it appears that bobby was another name for dewey dewey acquired a new cadillac as a result of the first accident however it is not clear from the record whether he paid the cost of the cadillac out of the settlement proceeds or received the car in a side agreement to the settlement at some time edward obtained control_over the settlement proceeds it is not clear from the record whether edward used some of the settlement proceeds to acquire property described infra dewey and michael died on date as a result of a second accident there is no evidence in the record that dewey’s or michael’s survivors received any settlement proceeds as a result of the second accident property records reveal that mary and edward engaged in the following real_property transactions between and date description of transaction purchased lot in prospect place for dollar_figure purchased lot in prospect place for dollar_figure purchased lot in prospect place for dollar_figure obtained a dollar_figure mortgage on lot obtained a dollar_figure mortgage on lot sec_175 sec_176 sec_177 sec_2 purchased lot on michael beckley plat for dollar_figure - - obtained dollar_figure mortgage on lot on michael beckley plat obtained dollar_figure mortgage on lot on michael beckley plat obtained dollar_figure mortgage on lot sec_175 sec_176 sec_178 sec_179 in prospect place sold lot sec_174 sec_175 sec_176 sec_177 sec_178 sec_179 in prospect place for dollar_figure the record does not reflect when or for how much edward and mary acquired interests in lot sec_175 and sec_176 in prospect place or what happened to lot on michael beckley plat the mortgage obtained on date was released on date the mortgage obtained on date was released on date mary died on date following mary’s death edward sold his home in the hagerstown area ’ he stayed with katherine for a period of time and then moved to new york where he lived first with chuck and then with his brother’s widow bolita kdward’s children did not know whether edward and bolita subseguently married in the gypsy custom or merely lived together it is not clear whether that home was located on lot sec_174 sec_175 sec_176 sec_177 sec_178 and sec_179 in prospect place which edward sold on date although it is not clear from the record edward may have sold his home through the use of a land_contract joe testified that following edward’s death jack began receiving the payments on a land_contract edward had entered into sometime before his death - - sometime during edward was admitted to new york city hospital because of problems he had related to diabetes one of his legs was amputated during that hospital stay sometime while he was hospitalized katherine and jack removed all of edward’s property from a safe deposit box he had at chase manhattan bank see infra for additional discussion relating to the removal of ekdward’s property from his safe deposit box after edward’s release from the hospital he moved to ohio to live with jack edward died in ohio on date in the gypsy culture edward’s money would go to a son because it was a gypsy custom for the first-born son to inherit everything respondent has no record showing that edward or mary ever filed a gift_tax_return respondent has no record showing that an estate_tax_return was filed for either edward or mary f other facts frank and katherine dealt exclusively in cash katherine maintained writing tablets on which she recorded receipts she gave those tablets and their bills to baptiste for use in preparing the tax returns there is no evidence that katherine or baptiste presented any of those tablets or bill receipts to respondent during the audit or afterward frank loved to gamble he frequently went to greyhound races in seminole county florida once or twice a year at katherine’s expense the johnson family including spouses and - -- their children took trips together to gamble in places such as the bahamas atlantic city new jersey and las vegas nevada over their lifetimes frank and katherine made numerous gifts to their children and grandchildren frank and katherine also gave them money and paid for some of their personal expenses at some time frank and katherine gave their daughter janie jewelry valued at dollar_figure katherine also paid for the weddings and divorces of her children and grandchildren she paid for vacations for her children and grandchildren and their families she gave them money to gamble katherine and frank also purchased u s savings bonds as birthday gifts for larry ronnie and sylvia in addition she gave them cash for asset acquisitions including houses cars and boats respondent was unable to locate any record showing that frank or katherine had ever filed a gift_tax_return katherine and frank received little or no formal education they had only minimal reading and writing skills and only basic math skills during the years in issue katherine suffered from various medical problems including a heart condition diabetes vision impairment high blood pressure high cholesterol levels water retention and obesity at various time during the years in issue she was admitted to the hospital for treatment her vision was impaired due to cataracts and retinal hemorrhages -- however during the years in issue she could see well enough to sort mail review advertisements or other literature and make notations on the tablets she used to record income one of her legs was amputated during and she used a wheelchair or an artificial leg which enabled her to walk with a cane at least toward the end of her life katherine’s health condition impaired her ability to work a full 8-hour day during the period through frank suffered from various medical problems including a heart condition high blood pressure and obesity during frank suffered a slight to moderate heart attack his health problems however did not prevent him from undertaking activities during the years in issue such as mowing his lawn fishing gambling and helping larry and ronnie renovate property frank and katherine experienced numerous medical_expenses during the years in issue the record does not reveal what portion if any of those expenses were paid_by medicare or medicaid frank and katherine purchased the longwood property during date for dollar_figure they financed dollar_figure of the purchase_price sometime before frank and katherine purchased a lot for dollar_figure it is not clear from the record whether this lot was the port st lucie property transferred to larry and ronnie on date - - during frank purchased a corvette for dollar_figure frank purchased a rolls royce during for dollar_figure he paid cash for the vehicle primarily in dollar_figure bills as of date katherine and frank had cash on hand of approximately dollar_figure throughout the years in issue they kept approximately dollar_figure cash on hand at the beginning and end of each year at a meeting with frank and katherine on or about date revenue_officer budde prepared a form 433-a collection information statement for individuals collection statement on the basis of information provided by them the collection statement among other things indicated that frank and katherine’s only assets were two bank accounts of dollar_figure and dollar_figure at glendale federal a residence valued at dollar_figure and monthly payments of dollar_figure a cadillac having zero value and a chevy having zero value the collection statement further indicated that frank and katherine’s only source_of_income at that time consisted of dollar_figure per month in social_security_benefits larry purchased a corvette during for dollar_figure during larry purchased a chevrolet suburban for dollar_figure -- - respondent was unable to locate any record showing that an estate_tax_return had been filed on behalf of frank or katherine g capital_gain for frank and katherine reported a long-term_capital_gain on their joint federal_income_tax return for from the sale of a lot lot they calculated that gain as follows sales_price dollar_figure basis big_number gain from sale big_number frank conveyed the lot to russell a sachs sachs by warranty deed dated date the settlement statement relating to the sale of the lot to sachs shows that dollar_figure of the dollar_figure sales_price was used to pay off a mortgage loan the settlement statement also shows expenses of the sale of dollar_figure frank had acquired his interest in the lot froma patricia a johnson patricia on date by means of a gquitclaim deed the quitclaim_deed stated that the transfer was for no consideration patricia had acquired her interest in the lot with john m johnson john for dollar_figure on date from charles and annie mobley mobleys pursuant to an articles of agreement which specified that title would not be conveyed until after payment of the dollar_figure purchase_price by quitclaim_deed john transferred the record does not reveal whether patricia a johnson was frank and katherine’s daughter patricia or an unrelated party with the same name - - his interest in the property to patricia in date fora stated consideration of dollar_figure the mobleys transferred title to frank by warranty deed on date on audit respondent increased the gain from the sale of that lot to dollar_figure and determined that the gain was a short-term gain the notice_of_deficiency indicates that the adjustment was made because of a change in verified basis and holding_period in the source and application of funds analysis for frank and katherine for respondent treats the dollar_figure as a source of funds il facts relating to issues involving transferee_liability a larry by notice dated date respondent determined transferee_liability against larry relating to the deficiencies additions to tax and penalties that respondent determined frank and katherine owed for the years in issue previously by letter dated date respondent had determined that frank and katherine had transferred the following assets to larry upon which transferee_liability attached -- -- description amount annual gifts in the form of excess of applications of funds over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number cash to purchase sanford property big_number glendale federal savings account transfer big_number longwood property equity big_number one-half interest in st lucie county property big_number transfer of vehicles rolls royce big_number lamborghini big_number chevy c30 big_number total transferred big_number the parties agree that for the years through larry acquired the following assets year description of asset cash paid mercedes sl cr dollar_figure gm suburban big_number chris craft boat big_number ford truck ferrari big_number sanford property big_number renovation to sanford property big_number lamborghini big_number cadillac big_number ford thunderbird jeep cj big_number chevrolet astro van big_number cadillac limousine big_number lincoln limousine big_number total big_number b ronnie by notice dated date respondent determined transferee_liability against ronnie for the deficiencies -- - additions to tax and penalties that respondent determined frank and katherine owed for the years in issue previously by letter dated date respondent determined that frank and katherine had transferred the following assets to ronnie upon which transferee_liability attached description amount annual gifts in form of excess of applications of funds over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number glendale federal savings account transfer big_number longwood property equity big_number one-half interest in st lucie county property big_number total assets transferred big_number the parties agree that for the years through ronnie acquired the following assets - al --- year description of asset cash paid porsche dollar_figure porsche ford truck chevy camaro big_number amf boat big_number ridgewood property big_number renovation to ridgewood property big_number renovation to ridgewood property big_number ford big_number ferrari big_number renovation to ridgewood property big_number corvette big_number jeep big_number jeep big_number landscaping big_number triumph big_number ford bronco big_number total big_number cc sylvia by notice dated date respondent determined transferee_liability against sylvia for the deficiencies additions to tax and penalties that respondent determined frank and katherine owed for the years in issue previously by letter dated date respondent determined that frank and katherine had transferred the following assets to sylvia upon which transferee_liability attached description amount annual gifts in the form of excess of applications of funds over sources of funds dollar_figure big_number big_number big_number big_number big_number total assets transferred big_number - -- the parties agree that for the years through sylvia acquired the following assets year description of asset cash paid corvette dollar_figure porsche big_number total big_number d specific transfer sec_1 u s savings bonds during the years in issue larry ronnie and sylvia acquired u s savings bonds in the following amounts face values year larry ronnie sylvia dollar_figure - - big_number dollar_figure - - - - - - - - dollar_figure - - - - big_number big_number total big_number big_number account at glendale federal savings and loan account no was maintained at glendale federal savings and loan in the names of frank and larry on date dollar_figure was deposited into that account representing the proceeds of a certificate of deposit an additional dollar_figure was deposited into that account on date account no had a balance of dollar_figure as of date when it was transferred into account no in the names of larry and ronnie -- - longwood property on date frank and katherine transferred the longwood property to larry and ronnie by quitclaim_deed for a stated nominal consideration pursuant to the quitclaim_deed frank and katherine retained for themselves the exclusive possession use and enjoyment of the rents issues and profits of the above-granted premises for and during the ir natural lifetime a real_estate tax bill dated date showed a real_estate tax value for the longwood property of dollar_figure a real_estate tax bill dated date showed a real_estate tax value for the longwood property of dollar_figure port st lucie property on date katherine transferred to larry and ronnie by guitclaim deed property located in port st lucie for a stated nominal consideration automobiles in date frank transferred his rolls royce to larry for no consideration at the time of the transfer the rolls royce had a value of dollar_figure also in date frank transferred the lamborghini to larry for no consideration at the time of transfer the lamborghini had a value of dollar_figure - opinion i issues relating to deficiencies a background petitioners contend that for each of the years in issue the expiration of period of limitations precludes the assessment of any deficiency respondent however contends that the fraud exception to the statute_of_limitations applies for each year in issue consequently respondent maintains assessment of the deficiencies is not barred for any year in issue alternatively respondent argues that the period of limitations for has not expired because the unreported income for that year exceed sec_25 percent of the income frank and katherine included on their return for that year therefore a 6-year statute_of_limitations applies for petitioners however maintain that frank and katherine did not understate their income for any year in issue respondent used an indirect method to reconstruct frank and katherine’s income for the years through specifically the source_and_application_of_funds_method to determine that frank and katherine had understated their income for those years petitioners contend that during those years frank and katherine used a previously acquired cash hoard to purchase assets and to pay personal expenses for themselves and other family members -- b statute_of_limitations and fraud issue sec_1 in general a deficiency in tax generally must be assessed within years of the date on which the return was filed see sec_6501 sec_6501 provides one of the exceptions to the general 3-year limitation period under that exception the tax may be assessed at any time in the case of a false_or_fraudulent_return filed with the intent to evade tax respondent has the burden of proving the applicability of an exception to the general 3-year limitation period see rule 116_tc_31 respondent must prove the same elements of fraud under sec_6501 as are required for imposing a fraud_penalty under sec_6653 see eg mobley v commissioner tcmemo_1993_60 affd without published opinion 33_f3d_1382 11th cir to prevail under sec_6653 respondent must show through clear_and_convincing evidence both that an underpayment_of_tax exists and some part of the underpayment is due to fraud see sec_7454 rule b 96_tc_858 affd 959_f2d_16 2d cir sec_6501 provides another exception to the 3-year general limitation period for assessing a tax under that exception the 3-year limitation period is extended to years where a taxpayer omits properly includable income from his or her -- - return in an amount in excess of percent of the amount of gross_income stated on the return see sec_6501 e a in determining whether the 25-percent requirement 1s met any amount omitted from gross_income that is adequately disclosed in the return or in a statement attached to the return is not taken into account see sec_6501 e a il we turn first to the issue of fraud because except possibly for where the 6-year limitation period may apply absent fraud the statute_of_limitations bars the assessment of the deficiencies for the years in issue see sec_6501 c e see also 24_tc_742 if fraud exists for we need not address whether the 6-year limitation period applies for that year fraud respondent contends that frank and katherine acted fraudulently in understating their income_tax_liability for the years in issue thus respondent asserts the resulting underpayments of tax for the years in issue were due to fraud petitioners however deny that frank and katherine under reported any income for the years in issue fraud is the intentional wrongdoing on the part of a taxpayer designed to evade a tax believed to be owing see eg 92_tc_661 thus courts must decide whether by the taxpayer’s conduct he or she a7 - intended to conceal mislead or otherwise prevent the collection_of_taxes owed or believed to be owed see eg 73_tc_370 respondent has the burden of proving the existence of fraud by clear_and_convincing evidence see sec_7454 rule b 75_tc_1 where fraud is determined for each of several years respondent’s burden applies separately for each of the years see eg temple v commissioner tcmemo_2000_337 the issue of whether fraud exists is factual and must be determined upon the basis of the entire record see eg 91_tc_874 fraud cannot be presumed nor can a finding of fraud rest on mere suspicion see eg id however since direct evidence of fraud generally is not available we may rely on circumstantial evidence and draw reasonable inferences from the record as a whole see eg id pincite we consider first for each year in issue the guestion of whether a deficiency exists a existence of an underpayment the first element in establishing fraud is determining whether any underpayment_of_tax exists for through sec_6653 defines an underpayment for purposes of sec_6653 as a deficiency defined by sec_6211 sec_6211 generally defines a deficiency as the excess of the correct amount of tax over the amount shown on the return for and -- - sec_6664 defines underpayment as the amount by which any_tax imposed by this title exceeds the excess of the sum of a the amount shown as the tax by the taxpayer on his return plus b amounts not so shown previously assessed or collected without assessment over the amount of rebates made thus for purposes of this case the term deficiency as defined by sec_6211 has the same meaning as the term underpayment as defined by sec_6664 respondent used the source_and_application_of_funds_method of reconstructing income in determining that frank and katherine had underreported their income for the years in issue and that unreported income resulted in deficiencies in tax for each year in issue taxpayers are regquired to keep adequate_records with which respondent may determine their correct_tax liability see sec_6001 see also petzoldt v commissioner supra pincite sec_1_6001-1 d income_tax regs when a taxpayer keeps no books or keeps books that are inadequate sec_446 authorizes the commissioner to compute the taxpayer’s income by any method that clearly reflects income see eg petzoldt v commissioner supra see also 967_f2d_986 4th cir affg tcmemo_1990_618 for that purpose respondent may use indirect methods to reconstruct income as long as they are reasonable in light of all surrounding facts and circumstances see holland v united_states u s --- - 937_f2d_1548 10th cir affg tcmemo_1989_552 54_tc_1530 the source_and_application_of_funds_method also sometimes referred to as the expenditures method is an accepted indirect method of reconstructing income see eg 999_f2d_760 4th cir affg tcmemo_1992_153 under that method any amount by which the taxpayer's total application of funds during the taxable_year exceeds the total funds available to him from known sources for that year is attributed to unreported taxable_income absent some showing by the taxpayer of a nontaxable source see eg id troncelliti v commissioner tcmemo_1971_72 as explanation the taxpayer may show that the difference between the total application of funds and the total reported sources of funds is attributable to such nontaxable items as loans gifts inheritances or assets on hand at the beginning of the taxable_period thus as part of the reconstruction_of_income using the source_and_application_of_funds_method respondent must exclude funds that the taxpayer had accumulated before the first taxable_year under examination insofar as those funds are a source of subsequent expenditures see flood v commissioner tcmemo_2001_39 frank and katherine dealt primarily in cash and provided to respondent no -- - books_and_records relating to katherine’s palmistry business under the circumstances respondent’s use of the source_and_application_of_funds_method to reconstruct frank and katherine’s income for the years in issue was reasonable where the allegation of fraud is intertwined with unreported and indirectly reconstructed income respondent can satisfy the burden of proving an underpayment_of_tax in one of two ways see 94_tc_654 first respondent may prove a likely source of the unreported income second where the taxpayer alleges a nontaxable source for the funds respondent may prove that the nontaxable source did not exist see id likely sources of income respondent contends that katherine’s palmistry business was a likely source for the unreported income respondent also contends that unreported gambling winnings were another likely source additionally respondent contends that frank may have unreported income from work as a real_estate broker as he alleged in certain loan applications ’ although there is testimonial evidence that katherine made some recordations of income on tablets that she kept for that purpose there is no evidence that those tablets were submitted to respondent nor were they introduced at trial we made no findings_of_fact relating to the loan applications because we find that the statements contained therein lack trustworthiness -- - petitioners contend that frank and katherine did not have any likely source for the unreported income in the amounts determined by respondent petitioners assert that frank was retired and seriously ill for all of the years in issue and his only source_of_income was social_security_benefits petitioners further assert that katherine’s palmistry business could not have generated the substantial receipts needed to produce the unreported income calculated by respondent for the years in issue they maintain that she was seriously ill much of that period and she was retired between date and date during which period her only income was social_security_benefits they further maintain that frank accurately reported his gambling winnings as for the loan applications petitioners argue that the applications were prepared by third parties and that there is no documentary_evidence to support the claim that frank worked as a real_estate broker for the years in issue we believe that petitioners paint an overly dramatic picture of frank’s and katherine’s health conditions for the years in issue in our opinion the record does not show that frank and katherine were too ill to conduct the activities that would generate income from two of the likely sources identified by respondent ie palmistry and gambling and we have made findings that they did conduct those activities during the years in issue the testimony of dr kerry m schwartz m d dr - - schwartz frank and katherine’s cardiologist during the years in issue does not indicate that he advised them not to work during those years rather his records indicate that during those years he recommended they undertake exercise and weight reduction programs indeed katherine continued her palmistry business after the period petitioners allege she was retired even though from dr schwartz’s records it appears she was experiencing more severe medical problems in the later years than she had experienced during the earlier years the record reveals furthermore that during the years in issue frank and katherine went on gambling junkets with other family members and he went fishing performed jobs around his home and assisted larry and ronnie in remodeling their properties other than petitioners’ self-serving statements there is no support in the record for petitioners’ contention that katherine was retired from her palmistry business during through date baptiste’s testimony reveals that he merely assumed that katherine was retired during that period because she did not furnish to him records of receipts for the preparation of their tax returns in her deposition katherine never testified that she had ever retired from her business indeed her testimony shows that she was conducting readings during one of the years petitioners’ contend she was retired furthermore lisa ruby’s testimony supports a finding that katherine continued to -- - read palms during and as well as the tv commercial katherine filmed during also gives the impression that she continued to read palms over her entire 50-year career as a palmist our review of the whole record leads us to conclude that katherine remained actively involved in her palmistry business throughout all of the years in issue and we have so found katherine’s palmistry business constitutes a likely source of funds for the unreported income additionally the record reveals that both katherine and frank gambled during the years in issue thus the record supports an inference that gambling provided another likely source for the unreported income accordingly we conclude that respondent has proved likely sources for the unreported income for the years in issue the large excess of expenditures over income revealed by respondent’s source and application of funds analysis for the years in issue supports respondent’s determination of unreported income absent a nontaxable source for the expenditures nontaxable source petitioners contend that frank and katherine used a cash hoard katherine had received from her father during or before to acquire assets and pay expenditures_for themselves and for larry ronnie and sylvia during the years in issue they assert that katherine’s father gave her about dollar_figure in cash - - plus gold coins and jewelry worth around dollar_figure to dollar_figure at the time of transfer additionally they assert that the value of gold increased substantially over the years thereby providing a larger available cash hoard for the years in issue respondent disputes petitioners’ claim of a cash hoard rather respondent asserts that frank and katherine could not have had cash on hand at the beginning of in the amounts claimed by petitioners we agree with respondent in her deposition katherine told conflicting stories relating to the acquisition of a cash hoard she allegedly received from her father according to one of those stories to keep bolita from taking edward’s money while he was in new york city hospital to have his leg amputated katherine and her brother jack went to edward’s safe deposit box at chase manhattan bank and removed cash totaling dollar_figure in nothing less than dollar_figure dollar_figure and dollar_figure dollar bills plus gold coins and jewelry worth at the time between dollar_figure to dollar_figure according to that story katherine returned to her home in florida with the cash gold coins and jewelry carried in a gypsy pillowcase and she kept edward’s property in her home in callahan florida and later in longwood florida or ina safe petitioners did not offer any evidence from jack relating to edward’s cash hoard or explain why jack was unavailable katherine testified in her deposition both that jack had died or years before the deposition and that he was living in an unknown location in england - -- deposit box with a bank in longwood florida purportedly katherine used some of the money to build her home in longwood florida she gave larry some of it to buy cars jewelry and his properties in callahan florida sanford florida and daytona beach shores florida she gave ronnie and sylvia some of the money to buy cars jewelry and their homes she spent some of it for vacations and to pay living_expenses of larry ronnie and sylvia jack white stole some of the money and chuck’s son also stole some it additionally katherine stated that she sold some of the jewelry to other gypsy women she gave some of it away to her relatives and chuck’s son also stole some of the jewelry in another version of the cash hoard story edward came to live with katherine after mary’s death and he stayed with katherine for or more years allegedly edward gave frank and katherine dollar_figure sometime before he came to live with them because he did not want joe to take his money katherine purportedly used the cash in the same manner as described above katherine further testified that her father gave her all of his and her mother’s jewelry and under threat of a curse told katherine not to give any of it to her siblings we believe that much of katherine’s implausible and conflicting testimony we know from the record that the chronology of this story cannot be accurate katherine moved into the longwood property in mary died on date and edward died on date - - regarding edward’s cash hoard was false or exaggerated our belief is strengthened by the inconsistent testimony relating to efdward’s cash hoard offered on deposition by three of katherine’s siblings tina testified that while her father was in the hospital to have his leg amputated she and katherine decided they needed money to obtain better medical_care for him she also stated that they wanted to keep edward’s money away from bolita tina stated that she was not present when katherine and jack removed edward’s property from his safe deposit box but she went with them to the bank and she saw katherine dump from a pillowcase cash gold coins and jewelry on a bed in her motel room she alleged that the cash was in denominations of nothing less than dollar_figure and dollar_figure dollar bills and the safe deposit box’s contents covered katherine’s bed tina stated that no one counted the money in her presence and that she returned to her home both before katherine returned to florida and her father was discharged from the hospital tina had no first-hand knowledge as to the amount of money in edward’s safe deposit box or the final disposition of the box’s contents tina’s recount of the tina testified that if katherine said that he gave her that money i am sure that he did because katherine had it in her possession tina’s conclusion that katherine had possession of the contents of the safe deposit box ignores the fact that jack and as will be recounted other siblings purportedly were in katherine’s motel room when the contents were revealed and that continued - - safe deposit story was inconsistent tentative and appeared to have been scripted in his deposition joe testified that he was not present when katherine and jack allegedly emptied their father’s safe deposit box but he saw the contents on a bed in katherine’s motel room he stated that he saw only gold coins and that on his urging katherine later returned those coins to edward’s safe deposit box joe further testified that edward had only dollar_figure at the time of his hospitalization and that jack asked joe to help pay edward’s medical_expenses chuck was not present in new york city at the time katherine and jack emptied edward’s safe deposit box thus he had no first-hand knowledge as to the contents of edward’s safe deposit box or as to the ultimate disposition of those contents although chuck testified generally about his father’s financial dealings and accumulation of cash he did not quantify the amount of money or the value of property that his father had accumulated over his lifetime how much money edward had at the time of his hospitalization or how much of that money if any edward gave to katherine the objective evidence does not support chuck’s testimony that edward was highly successful in his welding business or that he dealt heavily in property and livestock continued any one of them could have assumed custody of edward’s property subseguent to tina’s return home -- - other evidence in the record leads us to conclude that katherine did not receive dollar_figure from edward edward’s and mary’s earnings records property transaction records accident settlement information and testimony relating to edward’s and mary’s borrowing history medical history and life style indicate that edward could not have accumulated anywhere near the dollar_figure claimed by petitioners furthermore katherine testified that gypsies did not believe in carrying insurance and that neither mary nor edward had insurance if that is true then edward probably did not have medical insurance to pay his medical_expenses it would follow that some of edward’s life savings if any would have been used to pay his medical_expenses moreover according to gypsy custom edward’s money would have gone to a son even if edward had not wanted joe to get his money there was no showing that he also did not want jack to get it indeed joe testified that jack acquired fdward’s interest ina land_contract we find it implausible that jack who ultimately took responsibility for edward’s physical care after his discharge from the hospital would permit katherine to appropriate all of edward’s property at a time when edward was most in need of it yet petitioners would have us believe that edward willingly gave all of his property to katherine at a time he was experiencing extreme medical problems - - and needed funds himself accordingly we find petitioners’ allegation that edward gave katherine all of his cash gold coins and jewelry implausible and incredible we are not required to accept incredible implausible or biased testimony see eg 87_tc_74 even if we accepted katherine’s story that edward gave her all of his cash gold coins and jewelry which we do not the record contains no verification that any of it remained on hand by the end of the record indicates that over their lifetimes frank and katherine acquired properties and expensive automobiles and made numerous gifts to their children and grandchildren larry also acquired expensive automobiles before the years in issue furthermore the circumstances of larry ronnie and sylvia financing some of the cost of the properties and vehicles for which frank and katherine purportedly provided the remaining funds they acquired during the years in issue are inconsistent with petitioners’ allegation that at the beginning of frank and katherine were in possession of the substantial cash hoard they claim see eg appendices b through i petitioners contend that katherine used some of the money from edward’s safe deposit box to pay for his hospitalization that contention however is not supported by the references to the record they cited -- - accordingly on the basis of the entire record we find that respondent has shown petitioners’ contention of the existence of a dollar_figure or greater’ cash hoard at the beginning of to be inconsistent implausible and without objective support in the record petitioners do not contend and the record does not suggest that katherine and frank had accumulated a substantial cash hoard separate from edward’s alleged accumulation indeed katherine implied the opposite when she testified that my husband didn’t believe in banks we spent it as we got it to raise the children nonetheless on the basis of the entire record we believe that throughout the years frank and katherine maintained a practice of keeping cash on hand as evidenced by the amount of cash in their home safe when jack white burglarized their home in in our best judgment based on the entire record we estimate that amount to be dollar_figure see 23_tc_342 affd per curiam 234_f2d_25 petitioners contend that the dramatic increase in the price of gold substantially increased the value of the gold coins and jewelry that katherine received from her father thus that increased the amount of the available cash hoard even if we had accepted katherine’s cash hoard story the record does not establish how much of the coins and jewelry she sold or when they were sold in her deposition katherine testified that she kept the jewelry until she was robbed in and then she gave some away to relatives and sold some to other gypsies she never testified as to when she sold the items the number of items sold or the price that she received for them katherine made no mention of the disposition of the gold coins -- - 3d cir we have made a finding of fact to that effect except for our finding that frank and katherine had dollar_figure cash on hand as of date does not affect respondent’s source and application of funds analyses for the years in issue because we also have found that the amount of cash on hand at the beginning and end of each year in issue remained approximately the same thus since there was no net change in the amount of cash on hand at the beginning and end of any year in issue that cash in effect constitutes neither a source nor an application of funds for any year see infra section i c d of the opinion however where we discuss the effect of our finding regarding the dollar_figure cash on hand on the source and application of funds analysis for on the basis of the foregoing we conclude that respondent has established that petitioners did not utilize funds from a nontaxable source to finance the excess applications of funds over sources of funds for any year in issue consequently respondent has negated petitioners’ claim of a nontaxable source for the income summary relating to existence of an underpayment to establish an underpayment_of_tax for purposes of fraud penalties and additions to tax for fraud respondent had to prove an understatement of income and either establish a likely source for that income or negate nontaxable sources for the income see -- - 355_us_595 per curiam 348_us_121 890_f2d_711 5th cir we have concluded that respondent has proved likely sources for the unreported income and negated petitioners’ claimed nontaxable source for those excess applications of funds respondent’s negation of a nontaxable source combined with petitioners’ concessions relating to items reflected in respondent’s source and application of funds analyses for frank and katherine larry ronnie and sylvia establish that frank and katherine omitted income for each year in issue each omission_of_income resulted in a deficiency in tax frank and katherine’s omissions of income over the years in issue thus clearly and convincingly establish underpayments of tax for through see eg biaggi v commissioner tcmemo_2000_48 affd in unpublished opinion _ f 3d __ 2d cir accordingly we hold that respondent has satisfied the first element of establishing fraud by showing through clear_and_convincing evidence that frank and katherine had underpayments of tax for each of the years in issue we next address whether however see infra sec i c of this opinion wherein we discuss various adjustments we have made to the source and application of funds analyses for purposes of deciding the amount of understated income for each year in issue -- - respondent has fulfilled the second element of fraud which is intent to evade taxes b intent to evade taxes intent to conceal or mislead may be inferred from a course or pattern of conduct see 317_us_492 petzoldt v commissioner t c pincite 56_tc_213 53_tc_96 the courts have relied upon a number of indicia or badges_of_fraud in deciding whether an underpayment_of_tax is due to fraud see eg 796_f2d_303 9th cir affg tcmemo_1984_601 102_tc_632 petzoldt v commissioner supra pincite although no single factor is necessarily sufficient to establish fraud the existence of several factors constitutes persuasive circumstantial evidence of fraud see eg petzoldt v commissioner supra consistent failure to report substantial amounts of income over a number of years is standing alone highly persuasive evidence of fraudulent intent see eg 232_f2d_678 6th cir affg per curiam tcmemo_1955_31 consistent use of cash and failure to maintain adequate books_and_records also constitute badges_of_fraud see eg bradford v commissioner supra pincite - -- giving false misleading and inconsistent testimony is another badge of fraud see eg kim v commissioner tcmemo_2000_ failure to cooperate with revenue agents during the audit phase of a case is an additional indication of guilty knowledge on a taxpayer’s part see 79_tc_888 concealing assets also indicates fraudulent intent see spies v united_states u s pincite in determining fraudulent intent courts also have considered a taxpayer’s level of education and his or her prior history of filing federal_income_tax returns see eg 398_f2d_1002 3d cir respondent contends that the following indicia of fraud are present in the instant cases failing to report substantial amounts of income failing to maintain records dealing exclusively in cash failing to voluntarily file tax returns concealing transactions through fraudulent_conveyances and failing to cooperate in the examination in addition respondent asserts that the lack of credibility of petitioners and their witnesses is another indicium of fraud pattern of underreporting substantial amounts of income respondent contends that the source and application of funds analysis for frank and katherine shows that they consistently and substantially understated their income for at least years petitioners contend that frank and katherine reported their -- - correct income for each year in issue they maintain that neither frank nor katherine was capable of generating the kind of income determined by respondent for the years in issue we agree with respondent that the substantial understatements of income we found for the years in issue are a strong indication of fraudulent intent from each of the years through frank and katherine failed to report a substantial amount of income the record does not support a finding that neither frank nor katherine could generate the unreported income in issue katherine maintained her palmistry business throughout the years in issue and she and frank frequently engaged in gambling activities the pattern of underreporting substantial amounts of income over a period of years leads to a strong inference of fraudulent intent lack of records respondent contends that frank and katherine failed to provide respondent with whatever records they maintained and provided to their tax preparer respondent contends that the following circumstances negate any attempt by petitioners to assert that neither katherine nor frank could keep records both frank and katherine could write numbers frank could add numbers katherine could add a column of numbers and count money she could figure the cost of her advertising spots and she kept a writing tablet to record receipts -- - petitioners contend that katherine kept records of daily receipts and bills and delivered them to baptiste for preparation of the tax returns but they are no longer available due to the passage of time petitioners maintain that katherine did the best she could but her ability to keep records was limited because of her lack of education illiteracy lack of sophistication and poor health petitioners however do not explain why no records were presented to respondent for any year in issue during the course of the audit which commenced in we agree with respondent that the record does not support a finding that frank or katherine was incapable of keeping records during the years in issue they did present at least some records to their tax preparer moreover sylvia lived with them for most of that time and she performed bill-paying services for them petitioners do not explain why sylvia also could not have maintained their records while she lived with them the circumstances of the large understatements of income over the years in issue show that frank and katherine failed to maintain adequate_records of income and expenses their lack of recordkeeping coupled with a clear pattern of underreporting substantial amounts of income over a period of years leads to a particularly strong inference of fraudulent intent filing history respondent contends that frank and katherine’s failure_to_file federal_income_tax returns for and until contacted by revenue office budde and their failure_to_file gift_tax returns for any year in spite of vast amounts of gift giving to family members each year are indicia of fraud petitioners maintain that frank and katherine were not regquired to file returns for through because their income for those years did not meet the threshold income requirement petitioners do not explain why frank and katherine did not file gift_tax returns to report the gifts they gave their children and grandchildren during the years in issue frank and katherine filed timely income_tax returns for some of the years in issue which shows that they understood their obligation to file returns and pay tax we agree with respondent that the circumstance of frank and katherine’s not filing income_tax returns for through even though katherine continued to operate her business during those years is another indicium of fraudulent intent additionally we agree that frank and katherine’s failure_to_file gift_tax returns relating to the substantial gifts they made to their children and grandchildren during those years also indicates an intent to conceal and mislead -- - dealings in cash respondent contends that the fact that frank and katherine dealt exclusively in cash is another indicium of fraud petitioners contend that frank and katherine always conducted their transactions in cash because they were illiterate and because they learned the practice of using cash from their parents respondent maintains however that only self-serving evidence indicates that frank and katherine dealt in cash because of illiteracy respondent contends that frank and katherine could have used a checking account system as evidenced by the facts that they obtained mortgages and loans had competency in adding numbers could keep some records could sign their names and could read and write to some degree there is no evidence that frank and katherine could not have used banks to deposit receipts and pay expenditures nor do petitioners explain why sylvia did not maintain a checking account system for frank and katherine while she lived with them frank and katherine made numerous and substantial cash expenditures_for real_property and luxury automobiles we agree with respondent that their extensive use of cash for those types of expenditures supports a reasonable inference that frank and katherine knowingly and willfully attempted to conceal taxable_income -- - concealing transactions respondent contends that frank’s and katherine’s dealings in cash and their failure_to_file any gift_tax returns enabled them to conceal transfers of property from respondent until long after those transactions occurred respondent asserts that the concealment of assets is another indicium of fraud petitioners assert that there is no evidence that frank or katherine concealed any of the gifts they made to larry ronnie and sylvia petitioners however do not allege that frank or katherine filed gift_tax returns for the substantial gifts they admittedly gave to their children and grandchildren during the years in issue nor do petitioners explain why frank or katherine failed to file gift_tax returns relating to those gifts petitioners further assert that the fact that frank and katherine purchased assets for larry ronnie and sylvia that were easy to trace such as real_estate and automobiles shows that frank and katherine did not intend to conceal any transfers petitioners apparently overlook the fact that for the most part frank and katherine gave larry ronnie and sylvia cash to purchase those assets many of which were titled solely in larry’s ronnie’s and sylvia’s names thereby making it difficult to trace the cash we agree with respondent that frank and katherine tried to conceal their unreported income by giving larry ronnie and -- jo - sylvia cash or by placing assets in their names that conduct is evidence of fraudulent intent failure to cooperate with respondent respondent asserts that petitioners failed to cooperate with respondent’s agents during the examination of their returns respondent maintains that petitioners’ justification for their lack of cooperation 1ie that in or respondent’s revenue_agent referred to all gypsies as crooks does not provide a basis for failing to cooperate petitioners however maintain that respondent is attempting to attribute the actions of larry and baptiste to frank and katherine they contend that there is no evidence that frank and katherine failed to cooperate with respondent’s agents during the course of the examination of their returns or that katherine made false or misleading statements to respondent’s revenue agents petitioners maintain that the only employee of respondent who requested records from frank and katherine was revenue_officer budde and that request related to a delinquent filing investigation of their through returns petitioners contend that frank and katherine cooperated with revenue_officer budde by filing returns for those years even though they were not required to file them because of the income threshold requirements - 7jl1- we agree with petitioners that there is no evidence that either frank or katherine failed to cooperate with respondent’s revenue agents regarding the examination of their returns for the years in issue agent combs never interviewed frank or katherine in the course of that examination it also appears that respondent’s revenue agents never requested verification for items reflected on frank and katherine’s returns for the years in issue rather the adjustments to their returns resulted from statements katherine made during a deposition she gave relating to docket no to the effect that she and frank furnished funds to larry ronnie and sylvia to purchase assets and pay expenditures in excess of their incomes under those circumstances we find that the factor of cooperation supports neither party’s position credibility of witnesses petitioners assert that katherine made no false or misleading statements to respondent’s revenue agents moreover petitioners contend respondent did not rebut katherine’s cash hoard testimony which they assert was corroborated by katherine’s siblings respondent on the other hand contends that petitioners and their witnesses offered inconsistent vague unsupported and self-serving testimony commencing with the examination and continuing through trial - j2 - we found katherine’s and her siblings’ testimony conflicting and implausible for the most part we agree with respondent that katherine’s highly implausible and incredible story of receiving a substantial cash hoard from her father is another indication of fraudulent intent level of education age and state of health petitioners contend that frank and katherine had no formal education and were illiterate additionally petitioners contend that during the years in issue frank and katherine were elderly unsophisticated and suffering from serious illnesses petitioners assert that frank and katherine relied on their accountant to prepare their returns because of their lack of education petitioners in effect argue that those factors negate any inferences of fraud on the part of frank or katherine under the circumstances here presented we do not agree with petitioners’ position that frank’s and katherine’s lack of formal education illiteracy age lack of sophistication or health negate inferences of fraud although frank and katherine may have had no formal education they do not appear from the record to have lacked business acumen or sophistication dr schwartz described katherine as a bright woman and sharp most of the time katherine ran a successful palmistry business for more than years the circumstance that katherine kept some records relating to her business that she gave to baptiste for the -- - preparation of the tax returns shows that she was aware of the requirements to report income frank purchased a number of expensive vehicles over the years and paid for larry’s ronnie’s and sylvia’s acquisitions of property and vehicles he applied for loans and mortgages the record does not show that frank’s and katherine’s age and health conditions affected their mental capacity thus the record does not demonstrate that frank’s and katherine’s lack of formal education age or health conditions prevented them from being aware that they were required to report all of their income accordingly we conclude that the factors raised by petitioners do not negate the inferences of fraud raised by the other badges_of_fraud present in the instant cases summary regarding intent on the basis of the foregoing we conclude that for each year in issue respondent has proven through clear_and_convincing evidence that frank and katherine intended to evade taxes they knew or believed were owed cc conclusion regarding fraud and statute_of_limitations we have considered the other arguments raised by petitioners in their briefs but find them to be without merit on the basis of the foregoing we hold that for each year in issue respondent has proven by clear_and_convincing evidence an underpayment_of_tax and that some portion of the underpayment was attributable to fraud accordingly the fraud exception to the statute of - limitations applies for each year in issue therefore the statute_of_limitations does not bar respondent from assessing tax_liability against frank and katherine for any year in issue see sec_6501 since we have found fraud for all of the years in issue we need not address whether the 6-year period of limitations under sec_6501 applies for we next address the question of the amount of income frank and katherine omitted from their income for each of the years in issue c amount of understatement of income respondent contends that the source and application of funds analyses as adjusted and set forth infra in appendix a properly show the amount of income frank and katherine understated for all years in issue petitioners contend on the other hand that respondent’s source and application of funds analyses for frank and katherine larry ronnie and sylvia are faulty agent combs never interviewed frank or katherine about the source and application of funds analyses he performed for the years in issue to a large extent in calculating their applications of funds for the years in issue agent combs relied upon source and application of funds analyses he performed for larry ronnie and sylvia for the years in issue information he gathered regarding specific asset purchases bureau of labor statistics bls estimates of annual expenditures and katherine’s deposition statement that during the years in issue - she and frank gave larry ronnie and sylvia funds to purchase assets and to pay their personal living_expenses both frank and katherine were deceased by the time of trial petitioners have the burden of proving that respondent’s determinations as to the amount of the understated income are incorrect rule a the parties have agreed as to the amounts reflected on the source and application of funds analyses for frank and katherine larry ronnie and sylvia set forth infra in appendices a through i except as noted therein consequently we focus primarily on the items that the parties have identified as in dispute there are a few additional items in the source and application of funds analyses however which we believe from the record also need to be addressed those items also are discussed below adjustments to bls figures because of the absence of specific information relating to the johnson family’s personal living_expenses in the source and application of funds analyses for frank and katherine larry ronnie and sylvia respondent used data from table of the bureau of labor statistics consumer expenditure survey for each year in issue to calculate personal living expenditures petitioners contend that respondent’s use of the bls tables is flawed because those tables do not accurately reflect frank and katherine’s lifestyle petitioners assert that respondent did -- - not account for the circumstances that the johnson family members frequently lived and dined together in a communal lifestyle typical of their gypsy heritage frank and katherine were not able to drive but relied on larry ronnie and sylvia for their transportation they were illiterate they did not own life_insurance and they did not participate in a retirement_plan additionally petitioners contend that in the source and application of funds analysis for sylvia respondent failed to adjust the bls amounts to reflect that she lived with frank and katherine for the years through date under certain circumstances courts have found reasonable respondent’s use of data compiled by the bls to reconstruct income or to estimate personal living_expenses see eg 786_f2d_1063 11th cir affg tcmemo_1984_536 giddio v commissioner t c pincite the rationale for use of bls data is that w here there is evidence of taxable_income but no information can be acquired to ascertain the amount of such income we do not think it is arbitrary for the commissioner to determine that the taxpayer had income at least equal to the normal_cost of supporting his family giddio v commissioner supra pincite unquestionably the johnson family members incurred personal living_expenses during the years in issue frank and katherine did not maintain checking accounts or provide to respondent other - records relating to their expenditures_for the years in issue consequently in the absence of records we find reasonable respondent’s use of bls data to estimate personal living_expenses for the johnson family petitioners offered no proof rebutting respondent’s position that with certain adjustments frank and katherine larry ronnie and sylvia must have incurred personal living_expenses during the years in issue at least equal to the amounts reflected in the bls tables see pollard v commissioner supra nonetheless we agree with petitioners that additional adjustments to the bls figures are necessary we do not agree with petitioners that the johnson family lived together in a communal lifestyle although they may have come together often for meals and vacations larry maintained his own residence during all of the years in issue ronnie maintained his own residence from through and sylvia maintained her own residence from august through date thus we agree that personal living_expenses should be calculated separately for larry ronnie and sylvia at least for the periods they maintained separate households thus we find reasonable respondent’s methodology of calculating separately personal living_expenses for larry for all of the years in issue and for ronnie for through however we believe that personal living_expenses should be deleted from ronnie’s source and application of funds analyses - - for and inasmuch as he lived with frank and katherine during those years the personal living_expenses for frank and katherine should be adjusted correspondingly to include ronnie as a member of their household for and 7’ as for sylvia she lived with frank and katherine until date at which time she established her own residence accordingly personal living_expenses should be deleted from sylvia’s source and application of funds analyses for through date and the personal living_expenses for frank and katherine should be adjusted to include sylvia as well as jack miller and nicole as appropriate as members of their household for those years as for petitioners’ contention that adjustments to transportation items included in the bls average annual expenditure figures should be made in addition to vehicle acquisition costs except for one item public transportation we do not agree because the record reflects that frank acquired vehicles before and during the years in issue the record does although ronnie lived with frank and katherine for part of we make no allocation for that year because the record shows that he established his own residence in date and we believe that any adjustment for month would be nominal although the record shows that jack miller moved into the longwood property in late we do not include him as a member of frank and katherine’s household for because the record does not show exactly when he moved into the longwood residence additionally although the record shows that sylvia’s daughter was born in we do not include her as a member of frank and katherine’s household for because the record does not show exactly when she was born - jq - not show that frank did not drive or maintain those vehicles during the years in issue however we believe that public transportation figures should be deleted from the bls figures for all of the johnson family members because we do not believe that they would use public transportation in light of the number and kinds of vehicles they acquired before and during the years in issue as for personal insurance and pension figures in the bls figures we agree with petitioners that those items should be deleted for all johnson family members on the basis of katherine’s testimony that they did not believe in carrying insurance in addition we think that reading education and tobacco figures should be deleted for frank and katherine because of their ages illiteracy and health conditions as for ronnie and sylvia we believe that education figures should be deleted for them because of their ages and schooling history accordingly we hold that adjustments to the bls figures are needed in accordance with the above see infra appendix j for revised personal living_expenses for frank and katherine larry ronnie and sylvia reflecting those adjustments adjustment for specific gift petitioners contend that for respondent failed to credit either larry or ronnie with a dollar_figure specific gift that is charged to frank and katherine as an application of funds for -- - that year see infra appendices a i petitioners maintain that the gift consisted of a deposit of dollar_figure which frank and katherine made into a joint account in larry’s and ronnie’s names respondent maintains that no adjustment is required in larry’s or ronnie’s source and application of funds analyses to account for the dollar_figure gift because there is no evidence that any of the money in the account was withdrawn during that year thus respondent maintains the dollar_figure gift would have no impact on the source and application of funds analysis for larry or ronnie because the gift would be both a source of funds upon its transfer to the account and an application of funds at the close of the year in an equal amount we agree with respondent that no adjustment is reguired for this item because petitioners did not show a net change in the bank account balance and we hold accordingly adjustment for proceeds of automobile transactions petitioners assert that respondent failed to credit frank and katherine with the proceeds from at least three automobiles that frank sold or traded during the years in issue see infra appendix a respondent maintains that no adjustment is needed for the proceeds of the three alleged automobile transactions because the record does not establish that those transactions occurred nor do petitioners quantify the trade-in value or sales -- - proceeds they claim frank received for those vehicles we agree with respondent that petitioners have not established in the record that the transactions occurred or if they did occur the amount of trade-in allowance or sales proceeds received statements in briefs are not evidence and they cannot be used as such to supplement the record see eg rule b 99_tc_202 n thus we agree with respondent that no adjustment is reguired for additional proceeds from automobile transactions and we hold accordingly adjustments for larry’s audit results petitioners contend that respondent failed to adjust larry’s source and application of funds analyses for and to account for unreported income he agreed to include in his income for those years pursuant to the settlement of docket no see infra appendices h petitioners assert that an adjustment to larry’s source and application of funds analyses for unreported income for and would result ina corresponding reduction to the dollar_figure and dollar_figure gifts to larry respondent included as applications of funds by frank and katherine for those years respondent asserts that an adjustment to larry’s source and application of funds analyses for and for unreported income cannot be made because the record does not show to what extent if any the settlement related to any - - issue in the instant cases because unreported income was only one of several adjustments involved in docket no we agree with petitioners that an adjustment to larry’s source and application of funds analysis is needed for and to account for the compromise settlement of docket no however we do not agree with petitioners as to the amounts to be added as sources of funds for those years the tax deficiencies larry and nancy ultimately agreed to for those years dollar_figure for and dollar_figure for are less than the tax deficiencies set forth in the notice_of_deficiency dollar_figure and dollar_figure respectively thus it is apparent that not all of the total adjustments to income set forth in the notice_of_deficiency dollar_figure for and dollar_figure for were included in income in the compromise settlement see supra note according to our calculations larry and nancy agreed to percent of the deficiency proposed for dollar_figure divided by dollar_figure and percent of the deficiency proposed for dollar_figure divided by dollar_figure thus using our best judgment applying those percentages to the total proposed adjustments to income for those years we hold that larry’s sources of funds for and should be increased by dollar_figure and dollar_figure respectively see 39_f2d_540 2d cir - - adjustment for sylvia’s gambling expenditures petitioners maintain that gambling expenditures included in sylvia’s source and application of funds analyses for through should be eliminated because respondent did not substantiate those items at trial see infra appendices f through h respondent maintains that sylvia’s source and application of funds analyses are correct respondent asserts that petitioners agreed to these gambling expenditures in proposed joint findings_of_fact no in addition respondent states that the record establishes that sylvia went on one or two gambling vacations each year and that she participated in gambling activities joint findings_of_fact no states as follows the parties agree that the figures shown in black are the items of the source and application of funds analysis for which the parties are in agreement and in red for which the parties are not in agreement the gambling expenditures to which petitioners now take exception were shown in black on respondent’s appendix we take the statements in joint findings_of_fact no to represent a concession by petitioners that sylvia incurred the gambling expenditures in the amounts stated cf 50_tc_428 n certain statements in respondent’s brief found to be a concession 41_bta_777 statement in - - taxpayer’s brief found tantamount to concession affd 125_f2d_467 7th cir water resource control v commissioner tcmemo_1991_104 statements at trial and on opening brief deemed concession of interest deductions claimed on returns affd without published opinion sub nom whitehouse v commissioner 972_f2d_1328 2d cir nothing in the record contradicts that concession accordingly we hold that no adjustment is required in sylvia’s source and application of funds analysis for gambling expenditures additional items identified as in dispute the parties have identified the following items through joint finding of fact no as items to which they do not agree a withholding on gambling winnings in the source and application of funds analysis for sylvia for see infra appendix g respondent included as an application of funds dollar_figure for estimated withholding on gambling winnings petitioners do not explain why they disagree with that item in the source and application of funds analysis for respondent credited sylvia with dollar_figure in winnings from gambling activities on date petitioners do not disagree with that item we conclude that an estimated dollar_figure withholding at source is reasonable considering the amount of sylvia’s gambling winnings on date accordingly we hold that - - no adjustment is required for that item in sylvia’s source and application of funds analysis for b birthing costs for nicole in the source and application of funds analysis for sylvia for see infra appendix g respondent included as an application of funds dollar_figure for birthing costs for nicole johnson sylvia’s daughter in an affidavit dated date sylvia stated that frank and katherine paid her medical bills relating to nicole’s birth respondent does not explain how the dollar_figure was derived other than by estimation petitioners do not explain why they disagree with this item the record indicates that nicole was born in but it does not show the amount of medical_expenses attributable to her birth nor when those expenses were paid on the basis of the foregoing we conclude that it is not reasonable to include dollar_figure birthing costs as an application of funds in sylvia’s source and application of funds analysis for accordingly we hold that sylvia’s applications of funds for should be reduced by dollar_figure cc estimated_tax payments in the source and application of funds analysis for ronnie for see infra appendix g respondent included as an application of funds dollar_figure for estimated_tax payments made during ronnie’s tax_return for shows dollar_figure estimated - - tax_payments made during respondent does not explain why dollar_figure is used instead of dollar_figure petitioners do not explain why they disagree with this item statements in tax returns constitute admissions unless overcome by cogent evidence that they are wrong see eg 412_f2d_800 3d cir affg per curiam tcmemo_1968_126 on the basis of the foregoing we conclude that respondent’s use of dollar_figure for estimated_tax payments is reasonable accordingly we hold that no adjustment for that item is required in ronnie’s source and application of funds analysis for d tax payment in the source and application of funds analysis for ronnie for see infra appendix g respondent included as an application of funds dollar_figure for tax_payments ronnie’s tax_return for shows zero tax_payments made during anda tax due of dollar_figure respondent does not explain why dollar_figure is used instead of dollar_figure petitioners do not explain why they disagree with this item on the basis of the foregoing we conclude that a charge for tax_payments is reasonable we hold however that the amount for that item should be dollar_figure e wedding ceremony for sylvia in the source and application of funds analysis for frank and katherine for see infra appendix a respondent included as an application of funds dollar_figure for a wedding ceremony for - - sylvia respondent does not explain how that amount was derived other than by estimation petitioners do not explain why they disagree with that item the record shows that sylvia married jack miller during although katherine testified that she paid for the weddings of her grandchildren the record does not show how much she paid for sylvia’s wedding ceremony or when it was paid furthermore the record does not reflect what bride price jack miller through gypsy custom would have paid to frank and katherine for sylvia on the basis of the foregoing we conclude that it is not reasonable to include dollar_figure wedding ceremony costs as an application of funds in frank and katherine’s source and application of funds analysis for or accordingly we hold that their applications of funds for should be reduced by dollar_figure to account for this item f detective expenses in the source and application of funds analysis for frank and katherine for see infra appendix a respondent included as an application of funds dollar_figure paid to dennis dayle for detective expenses we have found that their daughter janie and frank hired dayle and that frank paid dayle dollar_figure in petitioners question dayle’s credibility but they did not introduce any proof showing that his testimony was inaccurate although we may question dayle’s ethics in working for both janie and her ex-husband we do not find dayle’s testimony regarding - gg - this item to be incredible as it comports with frank and katherine’s lifelong practice of paying expenses for their children janie did not testify at trial therefore there is no evidence that she paid dayle’s expenses the failure of a party to introduce evidence that is within his or her control gives rise to a presumption that the evidence if provided would be unfavorable to the party who has control_over the evidence see 6_tc_1158 affd 162_f2d_513 10th cir on the basis of the foregoing we conclude that respondent’s charge of dollar_figure for detective expenses is reasonable accordingly we hold that no adjustment for that item is reguired in frank and katherine’s source and application of funds analysis for g janie’s living_expenses in the source and application of funds analysis for frank and katherine for see infra appendix a respondent included as an application of funds dollar_figure paid for room and board for their daughter janie and her children the record does not establish whether frank or janie paid those expenses dayle testified that frank told him he paid janie’s expenses dayle however did not have any first-hand knowledge regarding who actually paid the expenses petitioners question dayle’s credibility larry testified that frank and katherine did not pay for janie’s expenses because she had her own money on the - - basis of the foregoing we conclude that it is not reasonable to include dollar_figure for janie’s living_expenses as an application of funds in frank and katherine’s source and application of funds analysis for accordingly we hold that their applications of funds for should be reduced dollar_figure to account for this item h duplications regarding johnson limousine in the source and application of funds analysis for frank and katherine for see infra appendix a respondent reduced gifts to larry ronnie and sylvia by dollar_figure to account for duplications regarding johnson limousine these adjustments are not explained further petitioners do not explain why they disagree with this item since the adjustment favors petitioners and they do not explain why it should not be made in the amount allowed by respondent we hold that no adjustment is required for that item in frank and katherine’s source and application of funds analysis for other adjustments after reviewing the record and the source and application of funds analyses for the johnson family members for the years in issue we believe that the following additional adjustments are needed to calculate excess applications of funds over sources of funds for those years a rental income respondent has stipulated that during larry received dollar_figure in cash as rental income for use of the sanford property and that larry included that amount in income on his tax_return respondent did not include the rental income ass a source of funds for see infra appendix f accordingly we find that larry’s source of funds for should be increased by dollar_figure to account for that rental income b duplication of rental expenses or mortgage payments in the source and application of funds analyses for ronnie and sylvia for the years in issue respondent included as applications of funds among other things business_expenses claimed on their schedules c and amounts they paid for rent or for mortgage payments for their residences see infra appendices d through i the record indicates that ronnie and sylvia operated their businesses out of their personal residences we believe that respondent included the portion of the rental expenses or mortgage payments attributable to ronnie’s business for through and to sylvia’s business for twice a sec_79 on appendix of respondent’s opening brief larry’s source and application of funds analysis for reflects as sources of funds both gross receipts-schedule e rental of dollar_figure and adjustments return rental income of dollar_figure the ultimate result of including both sources of funds was that respondent did not credit larry with any rental income for for convenience we did not show either source of funds on appendix f - - applications of funds accordingly we find that the source and application of funds analyses for ronnie and sylvia should be adjusted to exclude those duplicated expenses see infra appendices m and n for the amount of those adjustments c depreciation ronnie claimed depreciation expenses on his schedules c for dollar_figure and dollar_figure in ronnie’s source and application of funds analysis for respondent reduced applications of funds by the amount of depreciation claimed on his schedule c but respondent made no adjustment for depreciation for see infra appendices h and i respondent did not explain why depreciation was not excluded from applications of funds for we believe that the adjustment should be made and accordingly hold that ronnie’s application of funds analysis for should be reduced by dollar_figure to account for this item d cash and jewelry respondent included dollar_figure cash and dollar_figure jewelry as applications of funds in the source and application of funds analysis for frank and katherine for see infra appendix a those items constitute the cash and jewelry that frank and katherine reported to the police were in their safe when jack white burglarized their home during respondent contends that if frank and katherine did not have the dollar_figure cash and - dollar_figure in jewelry on date when revenue_officer budde prepared the collection statement then frank and katherine must have accumulated dollar_figure cash and dollar_figure in jewelry between the date of the collection statement and the date of the theft petitioners contend however that there is no evidence that the cash and jewelry were accumulated between those dates we agree with petitioners on the basis of our review of the entire record we believe that the collection statement did not accurately list all of the assets frank and katherine owned as of date we have made a finding of fact that frank and katherine had cash on hand of approximately dollar_figure as of date and that throughout the years in issue frank and katherine kept approximately dollar_figure cash on hand at the beginning and end of each year thus there was no net change in the amount of cash on hand during the years in issue in addition we believe that frank and katherine accumulated significant amounts of jewelry over their lifetimes the record does not establish that frank and katherine purchased any jewelry during it is not clear furthermore that all of the jewelry in their safe actually belonged only to frank and katherine frank and katherine had a lifelong practice of gifting property including jewelry to their children and grandchildren some of their children’s and grandchildren’s - - jewelry could have been in the safe that jack white stole therefore we conclude that it is not reasonable to include the dollar_figure cash and dollar_figure jewelry as applications of funds for merely on the circumstance that frank and katherine reported their theft to the police accordingly we hold that frank and katherine’s applications of funds for must be reduced by dollar_figure to account for the exclusion of that cash and jewelry summary relating to amount of understatement of income taking into consideration the foregoing adjustments to respondent’s source and application of funds analyses for frank and katherine larry ronnie and sylvia for the years in issue our computations show that frank and katherine had excess applications of funds over sources of funds in the following amounts year amount dollar_figure big_number big_number big_number big_number big_number big_number total big_number see infra appendix k for our revisions to the source and application of funds analysis for frank and katherine for the years in issue see infra appendices l m and n for our revisions to the source and application of funds analyses for larry ronnie and sylvia respectively for those years d capital_gain for on their return for petitioners reported the sale of property from which they realized a long-term gain of dollar_figure sales_price of dollar_figure less basis of dollar_figure respondent contends that frank and katherine had a short-term gain of dollar_figure dollar_figure less mortgage payoff of dollar_figure and expenses of sale of dollar_figure in their reply brief petitioners claim that frank and katherine’s daughter patricia transferred the subject property to them for no consideration at a time when she had an adjusted_basis in the property of at least dollar_figure petitioners contend that she gifted the property to frank therefore he had the same basis and holding_period for the property as she did petitioners contend further that frank’s adjusted_basis in the property at a minimum was dollar_figure dollar_figure basis plus dollar_figure expenses of sale they maintain that frank’s daughter may have had an additional basis of dollar_figure in the property which accounts for the dollar_figure basis claimed on the tax_return respondent asserts that petitioners have offered no evidence establishing that frank and katherine had a basis of more than dollar_figure in the property they sold in the record indicates that frank acquired his interest in the property by guitclaim deed from a patricia johnson on date for no stated consideration and that he sold that property - - days later by warranty deed for dollar_figure the settlement statement indicated a remaining balance on the mortgage loan of dollar_figure and sales expenses of dollar_figure petitioners bear the burden_of_proof in this issue rule a the record however does not establish a filial relationship between frank and the patricia johnson who transferred that property to frank or the circumstances relating to her transfer of the property to frank during see supra note this court does not consider statements in briefs to be evidence see 99_tc_202 n 48_tc_704 affd per curiam 413_f2d_1047 9th cir patricia did not testify at trial therefore there is no proof in the record that frank’s daughter gifted property to him the presumption is that her testimony would be unfavorable to petitioners see 6_tc_1158 affd 162_f2d_513 10th cir thus we agree with respondent that petitioners have not shown a basis in the property greater than the amount allowed by respondent or a holding_period greater than days accordingly we sustain respondent’s determination on this issue eb taxable social_security_benefits respondent contends that frank and katherine’s taxable social_security income for the years in issue should be increased as follows year amount dollar_figure big_number big_number big_number the increase in taxable social_security income resulted from the adjustments respondent made to frank and katherine’s income for those years sec_86 provides that gross_income includes a portion of social_security_benefits received by individuals whose modified_adjusted_gross_income increased by one-half of the social_security_benefits received during the years readjusted modified_adjusted_gross_income exceeds the base_amount see sec_86 and b modified_adjusted_gross_income is adjusted_gross_income without regard to social_security_benefits and other adjustments not pertinent to these cases see sec_86 the base_amount for a joint_return is dollar_figure see sec_86 for the years in issue the portion of social_security_benefits included in gross_income equals the lesser_of one-half of the social_security_benefit received or one-half of the excess of the taxpayer’s readjusted modified_adjusted_gross_income over the base_amount see sec_86 petitioners contend that respondent’s determination was made on the erroneous assumption that frank and katherine underreported their income for the years in issue therefore no - - adjustment for taxable social_security_benefits is required respondent agrees that the adjustment is computational we have found that frank and katherine understated their income for the years in issue accordingly frank and katherine’s income for though must be increased to include taxable social_security_benefits which are to be computed in accordance with our holdings in the instant cases ef self-employment taxes respondent contends that frank and katherine’s self- employment_taxes should be increased as follows year amount sbig_number big_number big_number big_number big_number big_number big_number big_number petitioners contend that no adjustment is required for this issue sec_1401 imposes a tax on the self-employment of every individual net_earnings_from_self-employment means the gross_income derived by an individual from any trade_or_business carried on by the individual less allowable deductions attributable to the trade_or_business plus certain items not relevant here see sec_1402 the term trade_or_business for purposes of the self-employment_tax generally has the same -- -- meaning as used for purposes of sec_162 see sec_1402 thus to be engaged in a trade_or_business within the meaning of sec_1402 an individual must be involved in an activity with continuity and regularity and the primary purpose for engaging in the activity must be for income and profit see 480_us_23 petitioners have the burden of proving that frank and katherine are not liable for self-employment taxes see rule a in the notices of deficiency respondent determined that both frank and katherine were involved in katherine’s palmistry business and calculated social_security_taxes for each of them petitioners contend on the other hand that frank never worked or participated in the operation of the palmistry business we agree that the record supports petitioners’ position that frank was not actively involved in katherine’s palmistry business additionally the record does not support a finding that frank was engaged in the trade and business of gambling even though he may have had income from gambling during the years in issue thus we conclude that frank did not have net_earnings from self- employment during the years in issue therefore he is not liable for self-employment taxes for those years we have found however that katherine was involved in her palmistry business during all of the years in issue therefore she is liable for - - the self-employment_tax for each of those years to the extent of her net_earnings_from_self-employment g self-employment deduction for sec_164 provides a deduction for one-half of the taxes imposed by sec_1401 for such year respondent contends that petitioners are entitled to increase their self- employment_tax deduction for in the amount of dollar_figure petitioners contend that respondent is incorrect this item is a computational adjustment and must be recalculated to reflect our holding in the instant cases that frank and katherine understated their income by dollar_figure and that only katherine is liable for the self-employment_tax imposed by sec_1401 for that year h married couples deduction respondent contends that frank and katherine are entitled to a dollar_figure married couples deduction for the years through petitioners contends that frank was retired for all of those years therefore frank and katherine are not entitled to a married couples deduction for any year in issue we agree with petitioners in the case of a joint_return for through sec_221 allows a deduction for two-earner married couples equal to percent of the lesser_of dollar_figure or the qualified_earned_income of the spouse with the lower qualified_earned_income for the taxable_year qualified_earned_income is defined as an amount equal to the excess of a the earned_income of the spouse for the taxable_year over b an amount equal to the sum of certain deductions allowable under sec_62 and properly allocable to or chargeable against earned_income see sec_221 respondent determined that both frank and katherine were involved in katherine’s palmistry business and thus allowed a dollar_figure married couples deduction for each of through we have found that frank was not actively involved in katherine’s palmistry business but was retired during the years through he had no earned_income for those years consequently we hold that frank and katherine are not entitled to the married couples deduction for through i additions to tax and penaltie sec_1 sec_6653 and sec_6663 respondent also determined additions to tax for fraud under sec_6653 and for and under sec_6653 a and b for and and under sec_6653 for and penalties for fraud under sec_6663 for and for and sec_6653 imposes an addition_to_tax equal to percent of any underpayment in tax if any part of the underpayment was due to fraud and sec_6653 imposes a separate addition_to_tax equal to percent of the interest payable under sec_6601 determined on the portion of the underpayment attributable to fraud for and sec_6653 a imposes an addition_to_tax equal to percent of the portion of an underpayment_of_tax attributable to fraud if any part of the underpayment was due to fraud and sec_6653 b imposes a separate addition_to_tax equal to percent of the interest payable under sec_6601 determined on the portion of the underpayment attributable to fraud for sec_6653 b imposes an addition_to_tax equal to percent of the portion of the underpayment that is attributable to fraud if any part of any underpayment of a tax required to be shown on a return was due to fraud for and sec_6663 imposes a penalty for fraud equal to percent of the portion of an underpayment that is attributable to fraud if any portion of an underpayment is attributable to fraud then the entire underpayment is treated as due to fraud unless the taxpayer can establish that some portion of the underpayment is not attributable to fraud see sec_6653 as in effect for and sec_6663 as in effect for and the elements of fraud under sec_6663 are essentially the same as those considered under sec_6653 see eg 114_tc_533 appeal dismissed and remanded 249_f3d_175 3d cir we have found that respondent proved with clear_and_convincing evidence that frank and katherine fraudulently understated their income for the years in issue thus respondent has proved that frank and katherine are liable for the additions to tax for fraud under sec_6653 and penalties for fraud under sec_6663 accordingly we sustain respondent’s determination as to the imposition of additions to tax or penalties for fraud for each of the years in issue however as to the interest-sensitive additions to tax imposed under sec_6653 for and we sustain respondent’s determination only as to the portion of the underpayments of tax for each of those years that respondent has shown to be attributable to fraud in accordance with our findings addressed in subsection b of this opinion sec_6661 respondent determined that petitioners are liable for the addition_to_tax under sec_6661 for through as a result of the substantial_understatement_of_income_tax in each of those years if there is a substantial_understatement_of_income_tax sec_6661 imposes an addition_to_tax equal to percent of the underpayment attributable to the for and petitioners have the burden of establishing what portion if any of the understatement is not attributable to fraud sec_6653 they have failed to carry that burden understatement an understatement is substantial if it exceeds the greater of percent of the tax required to be shown or dollar_figure sec_6661 a an understatement is defined as the excess of the tax required to be shown on the return over the tax actually shown on the return excepting items attributable to tax_shelters the amount of the understatement is reduced by items with respect to which the taxpayer had substantial_authority for his or her position or for which relevant facts affecting the tax treatment were adequately disclosed sec_6661 b b petitioners provided no evidence to show that they had substantial_authority for the understatements and their tax returns did not disclose the relevant facts sufficiently to enable respondent to identify the potential controversy involved see schirmer v commissioner 89_tc_277 instead petitioners relied on the evidence they presented to prove that frank and katherine did not underreport their income for any of the years in issue and hence there were no deficiencies for those years to prove that the additions to tax under sec_6661 would not apply we have found that the evidence supports respondent’s position that frank and katherine understated their income for the years in issue accordingly we sustain respondent's determination under sec_6661 for through il issues relating to transferee_liability a background respondent contends that larry ronnie and sylvia are liable as transferees of frank and katherine’s federal_income_tax liabilities for the years in issue because frank and katherine fraudulently conveyed funds and assets to larry ronnie and sylvia petitioners contend that larry ronnie and sylvia are not liable as transferees because frank and katherine did not have the requisite fraudulent intent sec_6901 provides that the liability of a transferee of property shall be assessed paid and collected in the same manner and subject_to the same provisions and limitations as in the case of the taxes with respect to which the liabilities were incurred sec_6901 does not impose liability on the transferee but merely gives the commissioner a procedure or remedy to enforce the transferor’s existing liability see 357_us_39 see also 100_tc_180 respondent bears the burden of proving that larry ronnie and sylvia are liable as transferees of frank and katherine see sec_6902 rule d to prevail under sec_6901 respondent must show the existence and extent of transferee_liability as determined under the law of the state in which the transfer occurred see commissioner v stern supra pincite hagaman v commissioner supra pincite the transfers involved in the instant cases occurred in the state of florida therefore the question of whether transferee_liability applies must be determined under the applicable florida law florida revised its statutory provisions relating to fraudulent_conveyances for years after thus florida statutes sections apply to transfers occurring before date while florida uniform fraudulent transfer act fufta chapter applies to transfers occurring after date see fla laws ch se 743_fsupp_851 s d fla nonetheless the legal and equitable principles of fla stat section dollar_figure continue to apply to post-1987 transfers see fla stat sec ' advest inc v rader supra pincite st fla stat sec provides as follows supplemental provisions unless displaced by the provisions of ss the principles of law and equity including the law merchant and the law relating to principal and agent estoppel laches fraud misrepresentation duress coercion mistake insolvency or other validating or invalidating cause supplement those provisions b florida’s statutory provision sec_1 pre-1988 transfers under fla stat section dollar_figure any conveyance of lands goods and chattels made with the intent to delay hinder or defraud creditors is void as to creditors unless the transferee gave good consideration and did not have knowledge or notice of the fraud at the time of the transfer see also in fla stat sec dollar_figure reads in pertinent part as follows dollar_figure fraudulent conveyance void every feoffment gift grant alienation bargain sale conveyance transfer and assignment of lands tenements hereditaments and of goods and chattels or any of them by writing or otherwise and every bond note contract suit judgment and execution which shall at any time hereafter be had made or executed contrived or devised of fraud covin collusion or guile to the end purpose or intent to delay hinder or defraud creditors or others of their just and lawful actions suits debts accounts shall be from henceforth as against the person or persons his her or their successors executors administrators and assigns and every one of them so intended to be delayed hindered or defrauded deemed held adjudged and taken to be utterly void frustrate and of none effect any pretense color feigned consideration expressing of use or any other matter or thing to the contrary notwithstanding provided that this section or anything therein contained shall not extend to any estate or interest in lands tenements hereditaments goods or chattels which shall be had made conveyed or assured if such estate shall be upon good consideration and bona_fide lawfully conveyed or assured to any person or persons not having at the time of such conveyance or assurance to them made any manner of notice or knowledge of such covin fraud or collusion as aforesaid anything in this section to the contrary notwithstanding re smith bankr m d fla sebring co v o'rourke fla so good consideration is that which would support a simple contract in re smith supra pincite citing parts depot inc v bullock so 2d fla dist ct app thus to constitute a fraudulent conveyance there must be a creditor to be defrauded a debtor intending fraud and a conveyance of property which is applicable by law to the payment of the debt due bay view estates corp v southerland fla so overruled en_banc on another issue lott inc v padgett fla so 2d see also 640_f2d_609 5th cir under florida case law a creditor is one who has asserted a legal claim or demand of contractual nature when the alleged fraudulent conveyance is made advest inc v rader supra pincite citing whetstone v coslick fla so to prove a fraudulent conveyance under fla stat section a creditor may establish a prima facie case by showing the presence of certain badges_of_fraud which gave a rebuttable inference of fraud or demonstrate actual fraudulent intent advest inc v rader supra the badges_of_fraud include among other things the transfer of property without valuable consideration a family relationship between the transferor and transferee retention of possession of the property by the transferor the transfer of the debtor's entire estate reservation of benefits control or dominion by the debtor insolvency of the transferor at the time or after the conveyance the pendency or threat of litigation against the transferor and secrecy or concealment of the transaction see e g 760_f2d_1225 llilth cir united_states v fernon supra 769_fsupp_362 m d fla advest inc v rader supra 433_fsupp_459 s d fla affd per curiam on another issue 576_f2d_650 5th cir money v powell so 2d fla dist ct app banner const corp v arnold so 2d fla dist ct app cleveland trust co v foster so 2d fla furthermore intent need not be actual see united_states v ressler supra stelle v dennis fla so a transfer that has the legal effect of causing delay or hindrance to creditors constitutes fraud in law regardless of the actual motives of the debtor see whetstone v coslick supra pincite livesay indus inc v 305_f2d_934 5th cir post--1987 transfers under fla stat section transfers made with the actual intent to hinder delay or defraud any creditor are fraudulent see fla stat a 873_fsupp_623 m d fla affd without published opinion sub nom ariko v united_states 92_f3d_1199 11th cir courts may consider the following factors among others as evidence of fraudulent intent a the transfer or obligation was to an insider b the debtor retained possession or control of the property transferred after the transfer c the transfer or obligation was disclosed or fla stat sec provides as follows transfers fraudulent as to present and future creditors a transfer made or obligation incurred by a debtor is fraudulent as to a creditor whether the creditor's claim arose before or after the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation a with actual intent to hinder delay or defraud any creditor of the debtor or b without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was engaged or was about to engage in a business or transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction or intended to incur or believed or reasonably should have believed that he or she would incur debts beyond his or her ability to pay as they became due concealed d before the transfer was made or obligation was incurred the debtor had been sued or threatened with suit e the transfer was of substantially_all the debtor's assets the debtor absconded g the debtor removed or concealed assets h the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred i the debtor was insolvent ’ or became insolvent shortly after the transfer was made or the obligation was incurred j the transfer occurred shortly before or shortly after a substantial debt was incurred and k the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor see fla stat sec a - k although one badge of fraud may only create a suspicious circumstance and may not constitute the requisite fraud to set_aside a conveyance several of them when considered together may afford a basis to infer fraud see eg johnson v dowell so 2d fla dist ct app banner constr corp v arnold so 2d pincite united_states v fernon f 2d pincite see also advest inc v rader f_supp pincite harper v commissioner tcmemo_1993_126 fraudulent_conveyances also include transfers made without fair under fla stat sec a debtor is insolvent if the total of his or her debts exceed the total of his or her assets at a fair valuation consideration when the debtor intended to incur or believed or reasonably should have believed that he or she would incur debts beyond his or her ability to pay as they became due see sec b furthermore fla stat section disregards intent and provides a transfer per se fraudulent where the creditor’s claim arose before the transfer the transfer lacked valid consideration and the debtor was insolvent at that time or became insolvent as a result of the transfer c discussion respondent contends that frank’s and katherine’s transfers to larry ronnie and sylvia are fraudulent under either fla stat section dollar_figure or fufta for the post-1987 transfers respondent contends that larry ronnie and sylvia are liable a sec_3 fla stat sec provides as follows transfers fraudulent as to present creditors a transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation a transfer made by a debtor is fraudulent as toa creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt the debtor was insolvent at that time and the insider had reasonable_cause to believe that the debtor was insolvent transferees under either fla stat sec a or sec petitioners however contend that the transfers to larry ronnie and sylvia were not fraudulent_conveyances because frank and katherine’s primary motives in making the transfers were personal gratification and estate_planning not to hinder or delay the collection of a creditor’s claim or otherwise to defraud any creditor petitioners maintain that the transfers were in accord with gypsy custom of parents giving their eldest son everything they own before or after they die thus petitioners contend frank and katherine had no fraudulent intent in making the transfers to larry ronnie and sylvia additionally petitioners assert that the fact that there were no known threats of lawsuits or creditors claims against frank and katherine supports the contention that they were not attempting to defraud creditors when they made the transfers there is no dispute that frank and katherine transferred funds or specific property to larry ronnie and sylvia without consideration during and after the years in issue indeed katherine testified that she had provided the funds for all of larry’s ronnie’s and sylvia’s purchases of assets and they affirmed katherine’s statement respondent contends that respondent became a creditor of frank and katherine for unpaid tax_liabilities and additions to tax and penalties for through on the last day of each of those taxable periods during which the tax_liability accrued thus respondent asserts frank and katherine owed the tax_liabilities additions to tax and penalties to respondent before frank and katherine made the subject transfers to larry ronnie and sylvia we agree that respondent was a creditor of frank and katherine at least by date because federal taxes are considered due and owing and constitute a liability regardless of when they are assessed no later than the date the tax_return for the particular period is required to be filed see 356_f2d_969 sth cir hagaman v commissioner t c pincite 28_tc_54 veigle v united_states f_supp pincite harper v united_states f_supp pincite united_states v ressler f_supp pincite respondent contends that the following badges_of_fraud apply to the transfers frank and katherine made to larry ronnie and sylvia lack of consideration close family relationship concealment of assets as a result of the difficulty in tracing cash the transfer of virtually all of their assets and insolvency resulting from the pattern of transfers petitioners deny that frank and katherine concealed any gifts to larry ronnie and sylvia they also contend that frank and katherine were not insolvent after the transfers were made -- - petitioners assert that subsequent to frank and katherine still owned substantial assets including a home valued at dollar_figure other real_property valued at dollar_figure and other assets valued at dollar_figure respondent however asserts that by the time katherine died all of her and frank’s assets had been transferred to larry ronnie and sylvia respondent maintains that in each of the years in issue frank’s and katherine’s known assets were less than their tax_liabilities thus respondent asserts frank and katherine were insolvent or rendered insolvent by virtue of the transfers to larry ronnie and sylvia we agree with respondent that the series of transfers to larry ronnie and sylvia rendered frank and katherine insolvent insolvency may be measured after a series of related transfers which in total leave the transferor insolvent see 134_f2d_538 8th cir affg 45_bta_970 see also hagaman v commissioner supra 93_tc_475 21_tc_70 frank and katherine’s tax_liability began accruing at the close of and that liability increased at the close of each additional year in issue see hagaman v commissioner supra thus by the end of frank and katherine’s tax_liabilities exceeded the assets enumerated by petitioners those assets were further reduced during when frank and katherine transferred their interest except for a life-estate in the longwood property to larry and ronnie for nominal consideration and in when frank transferred his interests in a rolls royce and a lamborghini to larry for no consideration katherine herself testified that by date she and frank had given away all of their assets except for the life_estate and dollar_figure to dollar_figure maintained in a bank account applying the florida statutory provisions to the transfers at issue we conclude that under either the pre-1988 or post- law frank’s and katherine’s transfers to larry ronnie and sylvia constitute fraudulent_conveyances the lack of consideration for the transfers their close family relationship frank and katherine’s retention of possession of the longwood property the transfer of essentially all of frank and katherine’s estates and their substantial indebtedness to respondent establish fraudulent intent in florida existing creditors have the benefit of a presumption of fraudulent intent where the conveyance is voluntary and there is a close relationship between the transferor and the transferee see hagaman v commissioner t c pincite the presumption is warranted in the instant cases for post-1987 transfers the lack of consideration insolvency and preexisting tax_liabilities also would render the transfers fraudulent_conveyances under fla stat sec see also 743_fsupp_851 s d fla petitioners however failed to meet their burden of rebutting that presumption of fraudulent intent additionally petitioners contend that transferee_liability should not be assessed against larry ronnie or sylvia because respondent made no attempt to assess or collect taxes from frank or katherine until months after katherine’s death thus petitioners assert respondent failed to make reasonable efforts to assess and collect tax_liabilities against frank and katherine before their deaths it is apparent from the record that attempts to collect frank and katherine’s tax_liabilities from their estates would be futile by katherine and frank already had given away all of their assets except for a life_estate in the longwood property and dollar_figure to dollar_figure in a bank account thus it is apparent that frank and katherine’s estates were insolvent by the time respondent mailed the notices of transferee_liability to larry ronnie and sylvia see gumm v commissioner supra pincite we do not agree with petitioners that respondent unduly delayed assessment of the deficiencies katherine did not reveal the transfers to larry ronnie and sylvia until date when she gave her deposition respondent has shown under applicable state law that larry ronnie and sylvia are liable as transferees of frank and katherine’s tax_liabilities for the years in issue accordingly we hold that larry ronnie and sylvia are liable as transferees under sec_6901 their liability is limited however to the value of the cash and other assets frank and katherine transferred to them except for those items addressed supra the parties have agreed to the amounts of those transfers accordingly in determining transferee_liability the cash and other assets must be adjusted to accord with the agreement of the parties and our holdings in the instant cases ’ see hagaman v commissioner supra pincite n gumm v commissioner supra pincite to reflect the foregoing decisions will be entered under rule we note that for purposes of the notices of transferee_liability in determining the value of assets transferred upon which transferee_liability attached for larry and ronnie respondent used the total fair_market_value for the longwood property for each of them without regard to the fact that they each had only a one-half interest in that property an appropriate adjustment is needed to account for the one-half interest appendix a source and application of funds frank and katherine johnson source of funds schedule c gross_receipts dollar_figure social security----frank estimated big_number interest_income freedom savings bank big_number total source of funds big_number application of funds schedule c expenditures big_number freedom savings bank big_number suburban big_number gifts to larry big_number gifts to ronnie big_number personal living_expenses for persons ‘big_number less housing costs ‘dollar_figure vehicle acquisition costs ‘big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items source of funds schedule c gross_receipts dollar_figure social security----frank estimated big_number interest_income freedom savings bank big_number total source of funds big_number application of funds schedule c expenditures big_number freedom savings bank big_number freedom savings bank cd big_number gifts to larry big_number gifts to ronnie big_number personal living_expenses for persons ‘big_number less housing costs ‘dollar_figure vehicle acquisition costs ‘big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items appendix c larry shows dollar_figure respondent concedes that the dollar_figure is overstated by dollar_figure see appendix c larry for an explanation of the difference source of funds schedule c gross_receipts dollar_figure social security----frank big_number net process from sale of lot big_number interest_income big_number freedom s l big_number freedom s l cd big_number total source of funds big_number application of funds schedule c expenditures big_number freedom savings bank big_number freedom savings bank cd big_number gifts to larry big_number gifts to ronnie big_number gifts to sylvia big_number personal living_expenses for persons 'big_number less housing costs ‘dollar_figure vehicle acquisition costs ‘big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items source of funds social security----frank estimated dollar_figure social security---katherine big_number interest_income freedom s l big_number freedom s l cd big_number total source of funds big_number application of funds freedom savings bank big_number freedom savings bank cd big_number corvette big_number sanford property gifted to larry big_number diamond ring gifted to janie johnson big_number gifts to larry big_number gifts to ronnie big_number gifts to sylvia big_number personal living_expenses for persons big_number less housing costs ‘dollar_figure vehicle acquisition costs big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the these items appendix e larry shows dollar_figure an explanation of the difference appendix e ronnie shows dollar_figure for an explanation of the difference source of funds social security----frank social security---katherine interest_income freedom s l freedom s l cd total source of funds amounts reflected for see therein larry for see therein ronnie dollar_figure big_number big_number big_number big_number big_number application of funds freedom savings freedom savings gifts to larry gifts to ronnie gifts to sylvia personal living housing vehicle less costs bank bank cd acquisition costs total application of funds expenses for persons ‘dollar_figure big_number excess of applications over sources of funds big_number big_number ‘big_number big_number ‘big_number ‘big_number big_number big_number dollar_figure ‘petitioners do not agree with the amounts reflected for these items appendix f ronnie shows dollar_figure for an explanation of the difference source of funds social security----frank social security---katherine interest_income freedom s l freedom s l cd trade in for suburban total source of funds application of funds freedom savings bank freedom savings bank cd cadillac chevy truck gifts to larry gifts to ronnie gifts to sylvia personal living less housing vehicle expenses for persons costs acquisition costs total application of funds dollar_figure ‘big_number excess of applications over sources of funds ‘petitioners do not agree with the amounts reflected for these items appendix g larry shows dollar_figure an explanation of the difference see therein see therein dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number ' big_number ' big_number 'big_number big_number dollar_figure larry ronnie for ‘appendix g ronnie shows dollar_figure see therein ronnie for an explanation of the difference source of funds social security--frank dollar_figure social security---katherine big_number green cove springs sale big_number gambling income big_number interest_income big_number freedom s l big_number freedom s l cd big_number total source of funds big_number application of funds freedom savings bank big_number glendale federal big_number corvette big_number gifts to larry big_number gifts to ronnie big_number gifts to sylvia ‘big_number wedding ceremony for sylvia ‘big_number personal living_expenses for persons big_number less housing costs 'dollar_figure vehicle acquisition costs big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items source of funds gross receipts---schedule c dollar_figure social security----frank big_number social security---katherine big_number gambling income big_number interest_income big_number ncnb savings big_number glendale federal big_number total source of funds big_number application of funds business deduction----schedule c ncnb cd cash at home jewelry corvette legal fees investigative fees dennis dayle room and board for janie johnson and children gift to larry and ronnie glendale federal gifts to larry gifts to ronnie gifts to sylvia less duplications re johnson limo personal living_expenses for persons big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number ‘big_number less housing costs 'dollar_figure vehicle acquisition costs ' big_number total application of funds excess of applications over sources of funds big_number big_number dollar_figure ‘petitioners do not agree with the amounts reflected for these items appendix i larry shows dollar_figure an explanation of the difference appendix i ronnie shows dollar_figure for an explanation of the difference appendix i sylvia shows dollar_figure for an explanation of the difference see therein see therein see therein larry for ronnie sylvia appendix b source and application of funds larry ronnie sylvia johnson larry johnson source of funds schedule c gross_receipts dollar_figure gambling income big_number interest_income first union bank accounts estimated balance big_number total source of funds big_number application of funds schedule c expenditures less interest depreciation big_number first union bank accounts estimated balance big_number u s savings bonds purchases big_number callahan property payments big_number allendale property payments big_number mercedes purchase big_number personal living_expenses for persons big_number less housing costs ‘dollar_figure vehicle acquisition costs ‘big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items ronnie johnson source of funds -0o- application of funds porsche purchase dollar_figure personal living_expenses for person ‘big_number less housing costs and vehicle acquisition costs ' total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items sylvia johnson information not provided appendix c source and application of funds larry ronnie sylvia johnson larry johnson source of funds schedule c gross_receipts schedule e income rental interest_income first union bank accounts estimated balance gmac loan total source of funds application of funds schedule c expenditures expenditures adjusted per audit first union savings account ending balance first union cds ending balance first union ira-larry first union ira-nancy u s savings bonds purchases callahan property payments allendale property payments suburban purchase note payments personal living_expenses for persons less housing costs big_number vehicle acquisition costs big_number total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number big_number ‘big_number big_number big_number big_number big_number dollar_figure ‘the source and application of funds analysis used for the notice_of_deficiency original s a reflects dollar_figure for this item and reflects an excess of applications over sources of funds of dollar_figure the parties agree that the correct amount for this item should be dollar_figure respondent now contends that the excess of applications over sources of funds is dollar_figure petitioners do not agree with the amounts reflected for these items ronnie johnson source of funds --oq- application of funds u s saving bonds purchases dollar_figure personal living_expenses for person big_number less housing costs and vehicle acquisition costs total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items sylvia johnson information not provided appendix d source and application of funds larry ronnie sylvia johnson larry johnson source of funds schedule c gross_receipts dollar_figure schedule e income rental big_number gambling income big_number interest_income first union bank savings accounts first union cds big_number first union ira-larry big_number first union ira-nancy trade in for mercedes big_number total source of funds big_number application of funds schedule c expenditures dollar_figure schedule e expenditures big_number first union savings account big_number first union cds big_number first union ira-larry big_number first union ira-nancy u s savings bonds purchases callahan property payments big_number chris craft boat titled to larry and frank big_number ford truck ferrari purchase big_number gmac note payments for suburban big_number personal living_expenses for persons 'big_number less housing costs ‘dollar_figure vehicle acquisition costs 'big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items ronnie johnson source of funds schedule c gross_receipts dollar_figure trade in for porsche big_number total source of funds big_number application of funds schedule c deductions dollar_figure rent and security deposit big_number porsche purchase big_number personal living_expenses for persons 'big_number less housing costs ‘dollar_figure vehicle acquisition costs ‘big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items sylvia johnson source of funds loan from first union bank dollar_figure application of funds corvette purchase big_number note payments big_number personal living_expenses for person ‘big_number less vehicle acquisition costs ‘ big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items appendix e source and application of funds larry ronnie sylvia johnson larry johnson source of funds schedule c gross_receipts dollar_figure schedule e income rental big_number interest_income first union bank savings accounts big_number first union cds big_number first union ira-larry big_number first union ira-nancy trade in for ferrari gifts from frank big_number credithrift mortgage dollar_figure big_number credithrift mortgage dollar_figure big_number ford truck total source of funds big_number application of funds schedule c expenditures dollar_figure schedule e expenditures first union savings account big_number first union ira-larry big_number first union ira-nancy callahan property payment sec_994 sun bank checking account big_number sun bank savings account sanford rental property big_number deposit on sanford property ‘big_number closing on sanford property ‘big_number credithrift mortgage dollar_figure payment big_number credithrift mortgage dollar_figure payment big_number lamborghini purchase big_number gmac note payments for suburban big_number personal living_expenses for persons big_number less housing costs dollar_figure vehicle acquisition costs total application of funds big_number excess of applications over sources of fund sec_3dollar_figure ‘these items were not included on the original sé a for larry the parties agree that amounts for these items are correct petitioners do not agree with the amounts reflected for these items appendix a reflects dollar_figure the dollar_figure difference represents the sum of those items addressed in footnote ronnie johnson source of funds schedule c gross_receipts dollar_figure application of funds schedule c deductions big_number rent big_number ford truck purchase ‘788 chevy camaro purchase big_number chevy camaro refurbishing costs big_number barnett bank savings personal living_expenses for persons dollar_figure less housing costs ‘dollar_figure vehicle acquisition costs big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘the original s a for ronnie reflects dollar_figure for this item the parties agree that dollar_figure is the correct amount the original s a for ronnie reflects dollar_figure for this item the parties agree that dollar_figure is the correct amount ‘petitioners do not agree with the amounts reflected for these items the original s a for ronnie reflects dollar_figure the dollar_figure difference represents the result of netting the adjustments addressed in footnote sec_1 and sylvia johnson source of funds --oq- application of funds corvette note payments dollar_figure personal living_expenses for person ‘big_number less vehicle acquisition costs total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items appendix f source and application of funds larry ronnie sylvia johnson larry johnson source of funds schedule c gross_receipts dollar_figure interest_income first union bank savings accounts big_number first union ira-larry big_number first union ira-nancy first union_ira interest distribution sun bank checking account big_number sun bank savings account contract deposit big_number total source of funds big_number application of funds schedule c expenditures dollar_figure schedule e expenditures big_number sun bank checking account big_number sun bank savings account big_number credithrift mortgage dollar_figure payment big_number credithrift mortgage dollar_figure payment big_number renovations per irs appraisal big_number gmac note payments for suburban big_number personal living_expenses for persons big_number less housing costs big_number vehicle acquisition costs big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘the sources of funds itemized above does not reflect dollar_figure in income from rents which respondent included and then took out of the source and application of funds analysis for larry respondent now concedes that larry received dollar_figure in rental income during petitioners do not agree with the amounts reflected for these items ronnie johnson source of funds schedule c gross_receipts dollar_figure gambling income big_number interest_income barnett bank saving account total source of funds big_number application of funds schedule c deductions big_number rent big_number barnett bank savings big_number port orange property purchase cash deposit big_number port orange property cash and closing costs big_number port orange property seller note big_number port orange property seller mortgage big_number port orange property renovations ‘big_number fishing boat big_number twin outboard motors big_number personal living_expenses for persons big_number less housing costs dollar_figure vehicle acquisition costs big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘the original s a for ronnie reflects dollar_figure for this item the parties agree that the correct amount is dollar_figure appendix ronnie reflects dollar_figure that latter amount appears to be a transposition error petitioners do not agree with the amounts reflected for these items appendix a reflects dollar_figure for this item the dollar_figure difference represents the adjustment addressed in footnote sylvia johnson source of funds schedule c gross_receipts application of funds schedule c deductions sun bank savings account u s savings bonds purchases gambling_losses personal expenses----comps corvette note payments personal living_expenses for person less vehicle acquisition costs total application of funds excess of applications over sources of funds ‘petitioners do not agree with the amounts these items dollar_figure big_number big_number big_number big_number big_number ‘big_number big_number dollar_figure reflected for appendix g source and application of funds larry ronnie sylvia johnson larry johnson source of funds schedule c gross_receipts dollar_figure schedule e gross_receipts 'big_number interest_income sun bank checking account big_number sun bank savings account big_number callahan property sales_price big_number mortgage note receivable big_number credithrift mortgage dollar_figure big_number constant notes big_number constant note due big_number total source of funds big_number application of funds schedule c expenditures dollar_figure schedule e expenditures big_number sun bank checking account big_number sun bank savings account credithrift mortgage dollar_figure payment big_number credithrift mortgage dollar_figure payment big_number credithrift mortgage dollar_figure payoff big_number callahan child care purchase_money_mortgage big_number settlement charges big_number daytona beach shores property purchase big_number cash at closing big_number constant note due payment big_number credithrift mortgage dollar_figure payment big_number seller mortgage note payment big_number gmac note payments for suburban big_number cadillac big_number personal living_expenses for persons big_number less housing costs dollar_figure vehicle acquisition costs big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘the original s a for larry reflects dollar_figure the parties agree that dollar_figure is the correct amount for this item this item was not included on the original s a for larry the parties agree that the amount reflected for this item is correct appendix larry reflects dollar_figure for this item that amount appears to be a typographical error petitioners do not agree with the amounts reflected for these items appendix a reflects dollar_figure the dollar_figure difference represents the result of netting the adjustments addressed in footnote sec_1 and ronnie johnson source of funds schedule c gross_receipts dollar_figure barnett bank saving account big_number trade in for porsche big_number florida national bank loan big_number sale of ford truck total source of funds big_number application of funds schedule c deductions big_number barnett bank savings big_number port orange property seller mortgage big_number port orange property renovations big_number legal fees big_number ford truck big_number ferrari gts big_number note payments big_number estimated_tax payments big_number tax_payments big_number personal living_expenses for persons less housing costs big_number vehicle acquisition costs big_number pension social_security big_number big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘this item was not included on the original s a for ronnie respondent concedes that the dollar_figure additional source of funds is correct petitioners do not agree with the amounts reflected for these items appendix a reflects dollar_figure the dollar_figure difference represents the adjustment addressed in footnote l sylvia johnson source of funds schedule c gross_receipts dollar_figure gambling income big_number interest_income sun bank savings account big_number trade in for corvette big_number first union bank loan big_number winnings from gambling activities big_number total source of funds big_number application of funds schedule c deductions big_number sun bank savings account u s savings bonds purchases cash for gambling big_number net gambling_losses big_number personal expenses----comps big_number note payments for corvette big_number payoff of note for corvette big_number porsche purchase big_number note payments for porsche big_number birthing costs-nicole johnson big_number withholding on gambling winnings estimated '345 personal living_expenses for persons big_number less vehicle acquisition costs big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items appendix h source and application of funds larry ronnie sylvia johnson larry johnson source of funds schedule c gross_receipts dollar_figure schedule e gross_receipts big_number interest_income big_number sun bank checking account big_number sun bank savings account callahan property note receivable big_number trade in for suburban big_number sun bank loan big_number sale of cadillac big_number total source of funds big_number application of funds schedule c expenditures dollar_figure schedule e expenditures big_number sun bank checking account big_number sun bank savings account sun bank cd big_number sec first cd big_number credithrift mortgage dollar_figure payment big_number constant notes payments big_number credithrift mortgage dollar_figure payment renovation alexander construction big_number ford t-bird big_number jeep cj-7 big_number chevrolet astro van big_number note payments for van big_number personal living_expenses for persons big_number less housing costs dollar_figure vehicle acquisition costs big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘the original s a for larry reflects dollar_figure for this item and dollar_figure for excess of applications over sources of funds the parties can not explain the dollar_figure difference petitioners do not agree with the amounts reflected for these items excess of applications over sources ronnie johnson source of funds schedule c gross_receipts interest_income barnett bank saving account trade in for jeep loan from barnett bank for boat total source of funds application of funds schedule c deductions big_number less depreciation barnett bank checking account barnett bank savings port orange property seller mortgage port orange property improvements ferrari gts payments corvette jeep jeep boat note payments on boat paving equipment personal living_expenses less housing costs 'dollar_figure vehicle acquisition costs big_number total application of funds of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number ‘big_number big_number big_number dollar_figure ‘petitioners do not agree with the amounts reflected these items sylvia johnson source of funds schedule c gross_receipts gambling income_interest income sun bank savings account total source of funds dollar_figure big_number big_number for application of funds schedule c deductions big_number sun bank savings account glendale federal bank big_number u s savings bonds purchases big_number net gambling_losses porsche payments big_number corvette-greenwood big_number personal expenses----comps big_number personal expenses--jewelry big_number personal living_expenses for persons big_number less vehicle acquisition costs ' big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘petitioners do not agree with the amounts reflected for these items appendix i source and application of funds larry ronnie sylvia johnson larry johnson source of funds schedule c gross_receipts schedule e gross_receipts interest_income sun bank checking account sun bank savings account sun bank cd sec first cd callahan property note receivable total source of funds application of funds schedule c expenditures schedule e expenditures sun bank checking account sun bank savings account sun bank cd sun bank cd estimated glendale federal credithrift mortgage dollar_figure payment constant notes payments credithrift mortgage dollar_figure payment note payments for van investment----johnson limo cadillac limo lincoln limo personal living_expenses for persons less housing cost sec_3dollar_figure vehicle acquisition costs dollar_figure total application of funds excess of applications over sources of funds ‘appendix larry reflects dollar_figure appears to be a typographical error the original s a for larry reflects dollar_figure for this item dollar_figure big_number big_number big_number big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure that amount the parties agree that dollar_figure is the correct amount ‘petitioners do not agree with the amounts reflected for these items appendix a reflects dollar_figure the dollar_figure difference represents a dollar_figure item for a jet ski reflected in the original s a for larry but not included in appendix larry see appendix l for our total adjustments to the source and application of funds analysis for larry for through ronnie johnson source of funds schedule c gross_receipts dollar_figure interest_income barnett bank checking account barnett bank saving account big_number trade in for ford truck big_number loan from fmcc for bronco credit life_insurance financing for bronco total source of funds big_number application of funds schedule c deductions big_number barnett bank checking account barnett bank savings big_number port orange property seller mortgage big_number ferrari gts payments big_number note payments on boat big_number triumph big_number bronco big_number payments on fmcc note investment--johnson limo big_number lincoln limo big_number personal living_expenses big_number less housing costs big_number vehicle acquisition costs big_number big_number total application of funds big_number excess of application over source of funds dollar_figure ‘this item was not included on the original s a for ronnie the original s a for ronnie reflects dollar_figure for this item the parties agree that dollar_figure is the correct amount for this item spetitioners do not agree with the amounts reflected for these items appendix a reflects dollar_figure the dollar_figure difference reflects a dollar_figure reduction of schedule c business_expenses reflected in the original s a for ronnie but not reflected in appendix ronnie we assume the dollar_figure represents depreciation we have found supra that ronnie’s application of funds analysis for should be reduced by dollar_figure to account for depreciation see appendix m for our total adjustments to the source and application of funds analysis for ronnie for through sylvia johnson source of funds schedule c gross_receipts dollar_figure interest_income sun bank savings account glendale federal bank big_number total source of funds big_number application of funds schedule c deductions big_number sun bank savings account glendale federal bank big_number u s savings bonds purchases big_number state road lease security deposit big_number rent big_number porsche payments ‘big_number investment---johnson limo big_number lincoln limo big_number personal living_expenses big_number less housing cost sec_3dollar_figure vehicle acquisition costs dollar_figure big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘the original s a for sylvia reflects dollar_figure for this item the parties agree that dollar_figure is correct the original s a for sylvia reflects dollar_figure for this item the parties agree that dollar_figure is correct spetitioners do not agree with the amounts reflected for these items appendix a reflects dollar_figure the dollar_figure reflects the adjustments addressed in footnote sec_1 and see appendix n for our total adjustments to the source and application of funds analysis for sylvia for through appendix j court’s revised personal living expenditures_for frank and katherine larry ronnie and sylvia through frank and katherine average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation reading education tobacco personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number larry average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation personal insurance and pensions big_number total reductions big_number personal living expenditures as revised ronnie personal living expenditures included with frank and katherine’s frank and katherine average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation reading education tobacco personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number larry average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation personal insurance and pensions big_number total reductions personal living expenditures as revised big_number ronnie personal living expenditures included with frank and katherine’s frank and katherine average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation reading education tobacco personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number larry average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number ronnie average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation education personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number sylvia personal living expenditures included with frank and katherine’s frank and katherine average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation reading education tobacco personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number larry average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number ronnie average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation education personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number sylvia personal living expenditures included with frank and katherine’s frank and katherine average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicle purchases big_number public transportation reading education tobacco personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number larry average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicle purchases big_number public transportation personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number ronnie average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicle purchases big_number public transportation education personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number sylvia personal living expenditures included with frank and katherine’s frank and katherine average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicle purchases big_number public transportation reading erducation tobacco personal insurance and pensions big_number total reductions personal living expenditures as revised big_number larry average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicle purchases big_number public transportation personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number ronnie average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicles big_number public transportation erducation personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number sylvia personal living expenditures included with frank and katherine’s frank and katherine average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicle purchases big_number public transportation reading education tobacco personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number larry average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicle purchases big_number public transportation personal insurance and pensions big_number total reductions big_number personal living expenditures as revised big_number ronnie average annual expenditures_for persons dollar_figure reductions shelter dollar_figure vehicle purchases big_number public transportation education personal insurance and pensions big_number total reductions big_number personal living expenditures as revised sylvia personal living expenditures included with frank and katherine’s frank and katherine average annual expenditures_for persons for months and persons for months reductions shelter vehicle purchases public transportation reading education tobacco personal insurance and pensions total reductions personal living expenditures larry dollar_figure big_number big_number as revised average annual expenditures_for persons reductions shelter vehicle purchases public transportation personal insurance and pensions total reductions personal living expenditures ronnie dollar_figure big_number big_number as revised average annual expenditures_for persons reductions shelter vehicle purchases public transportation education personal insurance and pensions total reductions personal living expenditures sylvia dollar_figure big_number big_number as revised average annual expenditures_for persons for months reductions shelter vehicle purchases public transportation education personal insurance and pensions total reductions personal living expenditures dollar_figure big_number big_number as revised dollar_figure big_number big_number dollar_figure big_number big_number dollar_figure big_number big_number dollar_figure big_number big_number appendix k court’s revised source and application of funds for frank and katherine johnson source of funds schedule c gross_receipts social security----frank estimated interest_income freedom savings bank total source of funds application of funds schedule c expenditures freedom savings bank suburban gifts to larry gifts to ronnie personal living_expenses for persons total application of funds excess of applications over sources of funds source of funds schedule c gross_receipts social security----frank estimated interest_income freedom savings bank total source of funds application of funds schedule c expenditures freedom savings bank freedom savings bank cd gifts to larry gifts to ronnie personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure source of funds schedule c gross_receipts social security----frank net process from sale of lot interest_income freedom s l freedom s l cd total source of funds application of funds schedule c expenditures freedom savings bank freedom savings bank cd gifts to larry gifts to ronnie gifts to sylvia personal living_expenses for persons total application of funds excess of applications over sources of funds source of funds social security----frank estimated social security---katherine interest_income freedom s l freedom s l cd total source of funds application of funds freedom savings bank freedom savings bank cd corvette sanford property gifted to larry diamond ring gifted to janie johnson gifts to larry gifts to ronnie gifts to sylvia personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure ‘our revisions to larry’s source and application of funds analysis for this year indicates an excess application of funds of dollar_figure see appendix l respondent’s appendix frank uses dollar_figure for gifts to larry for this year even though respondent shows an excess application of funds for larry on his source and application of funds analysis for of dollar_figure see appendices a and e we use dollar_figure for our revisions to frank and katherine’s source and application of funds analysis for because on the basis of joint finding of fact no we deem the lower amount to be a concession by respondent that such amount is the proper amount to use source of funds social security---frank dollar_figure social security---katherine big_number interest_income big_number freedom s l big_number freedom s l cd big_number total source of funds big_number application of funds freedom savings bank big_number freedom savings bank cd big_number gifts to larry big_number gifts to ronnie big_number gifts to sylvia big_number personal living_expenses for persons big_number total application of fund sec_164 sec_446 excess of applications over sources of funds dollar_figure source of funds social security--frank dollar_figure social security---katherine big_number interest_income big_number freedom s l big_number freedom s l cd big_number trade in for suburban big_number total source of funds big_number application of funds freedom savings bank big_number freedom savings bank cd big_number cadillac big_number chevy truck big_number gifts to larry big_number gifts to ronnie gifts to sylvia big_number personal living_expenses for persons big_number total application of funds big_number excess of applications over sources of funds dollar_figure ‘our revisions to larry’s source and application of funds analysis for this year indicates an excess application of funds of dollar_figure see appendix l respondent’s appendix frank uses dollar_figure for gifts to larry for this year even though respondent shows an excess application of funds for larry on his source and application of funds analysis for of dollar_figure see appendices a and g we use dollar_figure for our revisions to frank and katherine’s source and application of funds analysis for because on the basis of joint findings_of_fact no we deem the lower amount to be a concession by respondent that such amount is the proper amount to use source of funds social security--frank dollar_figure social security---katherine big_number green cove springs sale big_number gambling income big_number interest_income big_number freedom s l big_number freedom s l cd big_number total source of funds big_number application of funds freedom savings bank big_number glendale federal big_number corvette big_number gifts to larry big_number gifts to ronnie big_number gifts to sylvia big_number personal living_expenses for persons big_number total application of funds big_number excess of applications over sources of funds dollar_figure source of funds gross receipts---schedule c dollar_figure social security----frank big_number social security---katherine big_number gambling income big_number interest_income big_number ncnb savings big_number glendale federal big_number total source of funds big_number application of funds business deduction----schedule c ncnb cd big_number corvette big_number legal fees big_number investigative fees dennis dayle big_number gift to larry and ronnie glendale federal big_number gifts to larry big_number gifts to ronnie big_number gifts to sylvia big_number less duplications re johnson limo big_number personal living_expenses for persons for month and persons for months total application of funds big_number big_number excess of applications over sources of funds dollar_figure appendix l court’s revised source and application_for larry johnson source of funds schedule c gross_receipts gambling income_interest income first union bank accounts estimated balance total source of funds application of funds schedule c expenditures less interest depreciation first union bank accounts estimated balance u s savings bonds purchases callahan property payments allendale property payments mercedes purchase personal living_expenses for persons total application of funds excess of applications over sources of funds source of funds schedule c gross_receipts schedule e income rental interest_income first union bank accounts estimated balance gmac loan total source of funds of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure dollar_figure big_number big_number big_number big_number application of funds schedule c expenditures expenditures adjusted per audit first union savings account ending balance first union cds ending balance first union ira-larry first union ira-nancy u s savings bonds purchases callahan property payments allendale property payments suburban purchase note payments personal living_expenses for persons total application of funds excess of applications over sources of funds source of funds schedule c gross_receipts schedule e income rental gambling income_interest income first union bank savings accounts first union cds first union ira-larry first union ira-nancy trade in for mercedes total source of funds application of funds schedule c expenditures schedule e expenditures first union savings account first union cds first union ira-larry first union ira-nancy u s savings bonds purchases callahan property payments chris craft boat titled to larry and frank ford truck ferrari purchase titled to larry and frank gmac note payments for suburban personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure source of funds schedule c gross_receipts schedule e income rental interest_income first union bank savings accounts first union cds first union ira-larry first union ira-nancy trade in for ferrari gifts from frank credithrift mortgage dollar_figure credithrift mortgage dollar_figure ford truck total source of funds application of funds schedule c expenditures schedule e expenditures first union savings account first union ira-larry first union ira-nancy callahan property payments sun bank checking account sun bank savings account sanford rental property deposit on sanford property closing on sanford property credithrift mortgage dollar_figure payment credithrift mortgage dollar_figure payment lamborghini purchase gmac note payments for suburban personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure source of funds schedule c gross_receipts schedule e gross_receipts interest_income first union bank savings accounts first union ira-larry first union ira-nancy first union_ira interest distribution sun bank checking account sun bank savings account contract deposit total source of funds application of funds schedule c expenditures schedule e expenditures sun bank checking account sun bank savings account credithrift mortgage dollar_figure payment credithrift mortgage dollar_figure payment renovations per irs appraisal gmac note payments for suburban personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure source of funds schedule c gross_receipts schedule e gross_receipts interest_income sun bank checking account sun bank savings account callahan property sales_price mortgage note receivable credithrift mortgage dollar_figure constant notes constant note due total source of funds application of funds schedule c expenditures schedule e expenditures sun bank checking account sun bank savings account credithrift mortgage dollar_figure payment credithrift mortgage dollar_figure payment credithrift mortgage dollar_figure payoff callahan child care purchase_money_mortgage settlement charges daytona beach shores property purchase cash at closing constant note due payment credithrift mortgage dollar_figure payment seller mortgage note payment gmac note payments for suburban cadillac personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure source of funds schedule c gross_receipts schedule e gross_receipts interest_income sun bank checking account sun bank savings account callahan property note receivable trade in for suburban sun bank loan sale of cadillac compromise_agreement total source of funds application of funds schedule c expenditures schedule e expenditures sun bank checking account sun bank savings account sun bank cd sec first cd credithrift mortgage dollar_figure payment constant notes payments credithrift mortgage dollar_figure payment renovation alexander construction ford t-bird jeep cj-7 chevrolet astro van note payments for van personal living_expenses for persons total application of funds excess of applications over sources of of dollar_figure funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure source of funds schedule c gross_receipts schedule e gross_receipts interest_income sun bank checking account sun bank savings account sun bank cd sec first cd callahan property note receivable compromise_agreement of dollar_figure total source of funds application of funds schedule c expenditures schedule e expenditures sun bank checking account sun bank savings account sun bank cd sun bank cd estimated glendale federal credithrift mortgage dollar_figure payment constant notes payments credithrift mortgage dollar_figure payment note payments for van investment----johnson limo cadillac limo lincoln limo personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure appendix m court’s revised source and application of funds for ronnie johnson source of funds -q- application of funds porsche purchase dollar_figure total application of funds big_number excess of applications over sources of funds dollar_figure source of funds -q- application of funds u s saving bonds purchases dollar_figure total application of funds big_number excess of applications over sources of funds dollar_figure source of funds schedule c gross_receipts dollar_figure trade in for porsche total source of funds big_number application of funds schedule c deductions big_number rent and security deposit less dollar_figure claimed on schedule c big_number porsche purchase big_number personal living_expenses for persons big_number total application of funds big_number excess of applications over sources of funds dollar_figure source of funds schedule c gross_receipts application of funds schedule c deductions rent less dollar_figure claimed on schedule c ford truck purchase chevy camaro purchase chevy camaro refurbishing costs barnett bank savings personal living_expenses for persons total application of funds excess of applications over sources of funds source of funds schedule c gross_receipts gambling income_interest income barnett bank saving account total source of funds application of funds schedule c deductions rent less dollar_figure claimed on schedule c barnett bank savings port orange property purchase cash deposit port orange property cash and closing costs port orange property seller note port orange property seller mortgage less dollar_figure claimed on schedule c port orange property renovations fishing boat twin outboard motors personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure source of funds schedule c gross_receipts barnett bank saving account trade in for porsche florida national bank loan sale of ford truck total source of funds application of funds schedule c deductions barnett bank savings port orange property seller mortgage less dollar_figure claimed on schedule c port orange property renovations legal fees ford truck ferrari gts note payments estimated_tax payments tax_payments personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure source of funds schedule c gross_receipts interest_income barnett bank saving account trade in for jeep loan from barnett bank for boat total source of funds application of funds schedule c deductions big_number less depreciation barnett bank checking account barnett bank savings port orange property seller mortgage less dollar_figure claimed on schedule c port orange property improvements ferrari gts payments corvette jeep jeep boat note payments on boat paving equipment personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure source of funds schedule c gross_receipts interest_income barnett bank checking account barnett bank saving account trade in for ford truck loan from fmcc for bronco credit life_insurance financing for bronco total source of funds application of funds schedule c deductions less dollar_figure depreciation barnett bank checking account barnett bank savings port orange property seller mortgage less dollar_figure claimed on schedule c ferrari gts payments note payments on triumph bronco payments on fmcc note investment-johnson limo lincoln limo personal living_expenses for persons total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure appendix n court’s revised of source and application of funds for sylvia johnson source of funds loan from first union bank dollar_figure total source of funds big_number application of funds corvette purchase big_number note payments big_number total application of funds big_number excess of applications over sources of funds dollar_figure source of funds -q- application of funds corvette note payments dollar_figure total application of funds big_number excess of applications over sources of funds dollar_figure source of funds schedule c gross_receipts dollar_figure total source of funds big_number application of funds schedule c deductions big_number sun bank savings account big_number u s savings bonds purchases big_number gambling_losses big_number personal expenses---comp sec_356 corvette note payments big_number total application of funds big_number excess of applications over sources of funds dollar_figure source of funds schedule c gross_receipts gambling income_interest income sun bank savings account trade in for corvette first union bank loan winnings from gambling activities total source of funds application of funds schedule c deductions sun bank savings account u s savings bonds purchases cash for gambling net gambling_losses personal expenses----comps note payments for corvette payoff of note for corvette porsche purchase note payments for porsche withholding on gambling winnings total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure source of funds schedule c gross_receipts gambling income_interest income sun bank savings account total source of funds application of funds schedule c deductions sun bank savings account glendale federal bank u s savings bonds purchases net gambling_losses porsche payments corvette-greenwood personal expenses----comps personal expenses--jewelry total application of funds excess of applications over sources of funds source of funds schedule c gross_receipts interest_income sun bank savings account glendale federal bank total source of funds application of funds schedule c deductions sun bank savings account glendale federal bank u s savings bonds purchases state road lease security deposit rent less dollar_figure claimed on schedule c porsche payments investment----johnson limo lincoln limo personal living_expenses for persons for months total application of funds excess of applications over sources of funds dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number dollar_figure