                  T.C. Memo. 1995-570



                UNITED STATES TAX COURT



 WALTER VAN ECK AND FRIEDGARD VAN ECK, Petitioners v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 8666-92.           Filed November 29, 1995.



     R determined deficiencies in income tax based in
part upon: (1) a bank deposit analysis for the years
1982 through 1987, and (2) the disallowance of a
deduction claimed in 1987. Respondent also determined
additions to tax under sec. 6651, I.R.C., for failure
to file, and sec. 6653(a), I.R.C., for negligence.
     1. Held: Ps have in part carried and in part failed
to carry their burden of proving that the income items
in dispute were not gross income to them.
     2. Held, further, R's determination of additions
to tax under sec. 6651, I.R.C., are sustained.
     3. Held, further, R's determination of additions
to tax under sec. 6653(a), I.R.C., are sustained.


Walter Van Eck and Friedgard Van Eck, pro sese.

Catherine J. Caballero and Jeffery M. Wong, for respondent.
                                 - 2 -

               MEMORANDUM FINDINGS OF FACT AND OPINION

       HALPERN, Judge:   By one statutory notice of deficiency dated

January 27, 1992, respondent determined deficiencies and

additions to tax against petitioner Walter J. Van Eck as follows:

                                           Additions to Tax
                                             Sec.            Sec.
                             Sec.         6653(a)(1)      6653(a)(2)
Year        Deficiency      6651(a)      or (a)(1)(A)    or (a)(1)(B)

1982        $105,573        $26,393       $5,279        50%    of   interest
                                                        due    on   $105,573
1983          94,619         23,655         4,731       50%    of   interest
                                                        due    on   $94,619
1984          83,407         20,852         4,170       50%    of   interest
                                                        due    on   $83,407
1985         127,780         31,945         6,389       50%    of   interest
                                                        due    on   $127,780
1986         284,216         71,054       14,211        50%    of   interest
                                                        due    on   $284,216

By a second statutory notice of deficiency dated January 27,

1992, respondent determined deficiencies and additions to tax

against petitioners Walter J. and Friedgard V. Van Eck as

follows:

                                           Additions to Tax
                                 Sec.
                            6653(a)(1)(A)          Sec.                Sec.
Year        Deficiency        or (a)(1)        6653(a)(1)(B)           6661

1987         $55,593            $2,780        50% of interest           ---
                                              due on $55,593
1988          69,017             3,106             ---               $15,529

In her notices of deficiency, respondent explained the

adjustments giving rise to her determinations of deficiency.

Principally, those adjustments were based upon:       (1) Amounts

realized from the disposition of real property, (2) a bank
                               - 3 -

deposit analysis for the years 1982 through 1987, and (3) the

disallowance of a deduction claimed in 1987.   Petitioners filed a

single petition in response to both notices of deficiency.    Prior

to and during the trial of this case, the parties entered into a

series of stipulations that resolved all adjustments associated

with the disposition of real property and substantially reduced

the amounts of bank deposits that are in dispute.    On brief,

respondent has conceded that certain additional deposits

represent nontaxable items to petitioners and that the addition

to tax under section 6661 no longer is applicable.    We accept

such concessions.   Several items relating to respondent's bank

deposit analysis and the disallowed deduction remain for

decision, as do the additions to tax under sections 6651 and

6653.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years at issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.   Our findings of fact and opinion for each issue are

set out separately.

                    PRELIMINARY FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulations of fact filed by the parties and attached

exhibits are incorporated herein by this reference.
                                - 4 -

Residence and Return Filings

     Petitioners were residents of Wilsonville, Oregon, at the

time the petition in this case was filed.     Petitioner Walter J.

Van Eck (Walter) did not file income tax returns for the tax

(calendar) years 1982 through 1986.     Petitioners timely filed

joint income tax returns for the tax (calendar) years 1987 and

1988.

Individuals and Entities

     Walter and petitioner Friedgard Van Eck (Friedgard) were

married in 1986.    Previously, from 1973 to 1984, Walter was

married to Christine Kosydar (Kosydar).     Walter's marriage to

Kosydar ended in divorce.

     Gertrude (Gertrude) and William (William) Van Eck are

Walter's parents.    Gertrude's maiden name was Gertrude Vermande.

At all times here relevant, Gertrude and William maintained a

legal residence in East Haven, Connecticut.     Jan Van Eck (Jan) is

Walter's brother.    Renate Hodges (Hodges) is Friedgard's mother.

V. Keith Martin (Martin) was a personal friend of Walter's during

the years at issue.

Walter's Education and Employment

     Walter received a Bachelor of Arts degree from Reed College,

Portland, Oregon, in 1971.    Walter received a Juris Doctor from

Willamette University, College of Law, Salem, Oregon, in 1991.

As of the trial of this case, Walter had not been admitted to

practice law.   During the years at issue, Walter performed
                                 - 5 -

management services with respect to residential real estate

properties in Oregon that were owned by Walter, owned jointly by

Walter and Kosydar, or owned by other persons.     Walter had other

employment during some of the years in issue.

                                OPINION

Introduction

     The issues remaining for decision concern items of gross

income (mainly evidenced by bank deposits) that respondent claims

either Walter or Walter and Friedgard failed to report, a

deduction for 1987 claimed by Walter and Friedgard, and the

additions to tax for negligence determined by respondent.     Before

addressing those issues, however, there are a few preliminary

matters that we will address.

Findings of Fact

     The issues remaining for decision present us with numerous

questions of fact.   With respect to those questions, petitioners

bear the burden of proof, which they must carry by a

preponderance of the evidence.    Rule 142(a).

     As stated, we have found those facts that the parties have

stipulated.    Also, we have received into evidence those exhibits

attached to the stipulation of facts, as well as other exhibits

offered by the parties at trial.    The trial in this case lasted

4 days, and the resulting transcript is 809 pages long.     There

are approximately 200 exhibits.    At the close of the trial, we

directed the parties to file briefs.      We advised petitioners to
                                 - 6 -

follow our Rules carefully as to the form and content of their

briefs.   Rule 151 concerns itself with briefs.    Paragraph (e) of

that Rule addresses the form and content of briefs, and directs

that all briefs shall contain certain information.     Subparagraph

(3) of paragraph (e) directs that all briefs shall contain the

following:

     Proposed findings of fact (in the opening brief or
     briefs), based on the evidence, in the form of numbered
     statements, each of which shall be complete and shall
     consist of a concise statement of essential fact and
     not a recital of testimony nor a discussion or argument
     relating to the evidence or the law. In each such
     numbered statement, there shall be inserted references
     to the pages of the transcript or the exhibits or other
     sources relied upon to support the statement. In an
     answering or reply brief, the party shall set forth any
     objections, together with the reasons therefor, to any
     proposed findings of any other party, showing the
     numbers of the statements to which the objections are
     directed; in addition, the party may set forth
     alternative proposed findings of fact.

     Petitioners have filed both an opening brief and an

answering brief, as has respondent.      Petitioners' opening brief

fails to comply with Rule 151.    In particular, it fails to comply

with paragraph (e)(3) thereof.    Following the heading

"Petitioners' Proposed Findings of Fact" are 61 unnumbered pages,

containing petitioners' proposed findings of fact.     In support of

their proposed findings of fact, petitioners fail to provide any

references to either the trial transcript, exhibits, or

stipulated facts.   In her answering brief, respondent objects to

many of petitioners' proposed findings of fact as not being

supported by evidence in the record.     Because petitioners have
                                - 7 -

made it virtually impossible for the Court to verify any of their

proposed findings that were objected to by respondent, and

because they have violated Rule 151(e)(3), the Court, in making

its findings, has disregarded all of petitioners' proposed

findings to which respondent has objected.

     Respondent's briefs comply with Rule 151.   In respondent's

opening brief, respondent makes proposed findings of fact.    In

petitioners' answering brief, petitioners object to many of

respondent's proposed findings of fact and provide alternatives

thereto.   The section of petitioners' answering brief entitled

"Petitioners' Response to Respondent's Proposed Findings of Fact"

is 64 pages long and contains both objections and alternatives.

That section contains no citations to the record, either in

support of objections or in support of alternatives.    Following

that section of petitioners' answering brief is a section

entitled "Argument", the first subsection of which is entitled

"The Proposed Findings of Fact".   That subsection purports to

deal with both respondent's proposed findings of fact and

petitioners' "alternate" proposed findings of fact.    That

subsection is 751 pages long.   It in no way complies with the

instruction of Rule 151(e)(3) that proposed findings of fact

"shall consist of a concise statement of essential fact and not a

recital of testimony nor a discussion or argument relating to the

evidence or the law."   While the subsection does make reference

to the record, in some cases those references are incomplete
                                - 8 -

(e.g., "Tr. __, lines__.").   For the most part, the subsection

contains a mish-mash of facts and arguments that we cannot

separate.   In making our findings of fact, we have considered

those portions of the subsection that address respondent's

proposed findings of fact and that set forth specific objections.

We have not considered those portions of the subsection that set

forth alternative proposed findings of fact.   We have not done so

for the following reasons:    Those portions do not comply with the

requirements of Rule 151(e)(3) for proposed findings.

Respondent has had no opportunity to respond to those proposals.

Petitioners cannot escape their initial failure to make

acceptable proposed findings simply by proposing alternatives to

respondent's findings.   We extended petitioners' time to file

their answering brief at least three times.    It would be unfair

to visit on respondent the additional delay involved in requiring

a response.

     In arriving at our findings of fact, we have taken into

account those facts that have been stipulated, and have accepted

certain facts proposed by respondent.   We have examined both the

exhibits in evidence and the transcript of the trial, and we have

found certain facts based on those examinations.

Burden of Proof

     Also, before proceeding, we wish to comment on what appears

to be petitioners' misunderstanding of the burden of proof.    In

their briefs, petitioners repeatedly state or imply that it is
                               - 9 -

respondent's responsibility to show that petitioners received an

item of income, were not entitled to a deduction, or are subject

to the additions to tax.   That, of course, is not so.    See Rule

142(a).   Walter has had legal training.   He was advised by the

Court to pay close attention to our Rules.    At various times,

both the Court and respondent's counsel have tried to give

petitioners, who represent themselves, help in understanding and

complying with the procedures and formalities for preparing,

trying, and briefing their case.   We cannot, and will not,

however, excuse or overlook petitioners' failure to abide by our

Rules or to understand some of the basic and fundamental aspects

of bringing a case in the Tax Court.   Petitioners' apparent

failure to understand their obligation to prove their case

imposes risks that they must bear.

Income Items in Dispute

     The parties have stipulated to, or conceded at trial or on

brief, numerous issues that relate to respondent's bank deposit

analysis.   The parties have stipulated to the amounts that are in

dispute under respondent's bank deposit analysis.    They have

prepared an exhibit (Exhibit 201-GK) setting forth those amounts

and certain other amounts that were not deposited in any bank

account but that are in dispute between the parties.     We have

reproduced Exhibit 201-GK as an appendix.    We accept that the

items on Exhibit 201-GK are the remaining items of income that

are in dispute and that we must determine.    We have grouped those
                                - 10 -

items into eight categories: (1) 1982 Rental and Contract

Deposits, (2) 1984, 1986, and 1987 Rental Deposits, (3) GVE

Loans, (4) Triad Distribution, (5) WFVE Gifts and Loans,

(6) Reprographics Plastics Deposits, (7) Unknown Source Deposits,

and (8) Nondeposited Amounts.     We will treat each of those

categories and the parties' respective arguments in turn.       As

necessary, we shall make findings of fact relative to each

category.

     1.   1982 Rental and Contract Payments

     On Exhibit 201-GK, under the heading "Rental Income", for

1982, in a row labeled "Total Rent Income", is the amount:

$38,546.71.     Under the headings "Interest Earned On The--16074

Contract" and "Interest Earned On The--19556 Contract:     Payment

Book #36" are the amounts:     $9,384.79 and $8,704.20,

respectively.     Walter concedes that one-half of each of those

three amounts is gross income to him.     Respondent concedes that

the remaining halves are not gross income to him.     Respondent

also concedes that the total "Interest Earned" amount ($18,088.99

= $9,384.79 + 8,704.20) reduces the amount shown for 1982 in the

row labeled "Unknown".     We accept those concessions and find

accordingly.

     2.     1984, 1986, and 1987 Rental Deposits

     On Exhibit 201-GK, under the heading "Rental Income", in a

row labeled "Total Rent Income", are the amounts $5,352, $3,206,

and $15,622.02, for 1984, 1986, and 1987, respectively.     On
                               - 11 -

brief, respondent states:    "These rents were generated from

properties belonging to either William or Gertrude Van Eck

[William's parents], Renate Hodges [Friedgard's mother] or Keith

Martin [Walter's friend]."    Apparently, ownership of some or all

of such properties changed hands from Walter after 1982.     We

accept as true respondent's statement as to post-1982 ownership

by others than Walter, and we find accordingly.    Walter argues

that the income from such properties should be taxed to those

others, the post-1982 owners of the properties.    Respondent

argues as follows:

          Respondent admits that the rents from these
     properties initially constituted gross income to
     petitioners' parents, rather than petitioners. It
     bears restating, however, that Walter Van Eck never
     transferred a dollar of the net rents to petitioners'
     parents or Keith Martin during any of the tax years at
     issue. * * * Portions of the rents collected, after
     being commingled with funds from other sources, were
     spent upon mortgage and other expenses associated with
     the properties. * * * The balance of the rents were
     spent by petitioners for their own personal purposes,
     together with the other funds they deposited as
     "loans," "gifts," or funds belonging to other family
     members. * * *

     Respondent has failed to explain how income that was income

to others became income to Walter or Walter and Friedgard.

Apparently, respondent is frustrated with the difficulties that

her agents and attorneys encountered during the examination and

trial preparation phases of this case:

          Respondent submits that the record morass created
     by Walter Van Eck is so deliberately confounded, and
     his credibility is so negligible, that we must reduce
                              - 12 -

     the issue of gross income to its most fundamental
     components: who owned the funds, and in what form were
     they received. The question of fund ownership must be
     reduced to its most critical component: who received
     the benefit of the funds. The second question
     regarding form of receipt begs the critical issue in
     this case: did Walter Van Eck receive hundreds of
     thousands of dollars in loans and gifts from family
     members during the tax years at issue, or is he engaged
     in some income producing activity which he and his
     relatives are concealing from respondent?

Respondent's frustration, however, and the suspicions born of it,

are no substitute for evidence.   Respondent admits that the

properties in question, at least during 1984, 1986, and 1987, did

not belong to Walter (or Walter and Friedgard), and that the

rents from those properties did not "initially" constitute gross

income to Walter or Walter and Friedgard.   Without more, such

admissions are consistent only with the conclusion that the rents

in question are not gross income to either Walter or Walter and

Friedgard.   Respondent bears the burden of going forward with the

evidence to show that, either by theft or honest labor, the rents

in question became items of gross income of Walter or Walter and

Friedgard.   Despite all her huffing and puffing, that is

something respondent has failed to do.   Respondent has failed to

carry her burden of going forward with the evidence to prove that

the rents, initially the income of others, became items of gross

income of either Walter or Walter and Friedgard.   For that

reason, we find that the rents in question were not items of

gross income to either Walter or Walter and Friedgard.   We hold
                                  - 13 -

accordingly, and we do not sustain respondent's deficiencies to

that extent.

     3.   GVE Loans

                             FINDINGS OF FACT

     From 1982 through at least the beginning of June 1987,

Walter maintained a checking account in Connecticut, in his own

name, at Connecticut National Bank, account number 245-7044

(Conn. account 7044).   From June 1983 through April 1985, Walter

maintained a checking account in Oregon, in his own name, at U.S.

Bank, account number 155-0502-221 (USB account 2221).        The

amounts shown on Exhibit 201-GK in the row labeled "GVE Loans"

reflect certain deposits to Conn. account 7044 and USB account

2221 of funds received from Gertrude, Walter's mother.        The

amounts remaining in dispute as GVE Loans are as follows1:

                      Year               Amount
                      1982             $32,564.84
                      1983              23,741.95
                      1984              48,008.70
                      1985              49,389.93
                      1986              39,872.48
                      1987              20,615.80


Those amounts were deposited to Conn. account 7044 and USB

account 2221 during the years indicated.        All of those amounts


1
     Except with regard to 1987, our findings agree with the
entries for 1982 through 1987 in the row labeled "GVE Loans" on
Exhibit 201-GK. The discrepancies arise from respondent's
proposed finding 434d., which leads to the lesser amount found.
We accept that difference as a concession by respondent.
                             - 14 -

were deposited to Conn. account 7044 except for $2,500 and $500

deposited to USB account 2221 in 1983 and 1984, respectively.      Of

those amounts, the following amounts constitute fees for

management services rendered by Walter:

                    Year           Amount
                    1982           $2,072
                    1983              757
                    1984            1,527
                    1986              303
                    1987            1,887

                             OPINION

     The label "GVE Loans" stands for Gertrude Van Eck loans,

which, respondent argues, is a misnomer.    Respondent discusses

the GVE Loans as follows:

     Walter Van Eck never provided the Court with a summary
     of all of the loans he allegedly obtained from Gertrude
     Van Eck during the tax years at issue. Respondent has
     never undertaken the Herculean task of determining the
     alleged loan amounts from Walter Van Eck's records.

          The heading [GVE Loans], instead, largely refers
     to the number of deposits which were made into Walter
     Van Eck's Connecticut account, Conn-7044. * * *
     Respondent initially understood that the Conn-7044
     account was exclusively used as a loan account between
     Gertrude and Walter Van Eck. Respondent accordingly
     deemed all of the deposits into Conn-7044 to be alleged
     loans.

          Respondent subsequently discovered that the Conn-
     7044 account was also used for a variety of other
     purposes. It was used to transmit funds allegedly
     originating from William Van Eck to Walter Van Eck. It
     was also used as a vehicle for transferring funds from
     Connecticut to the Oregon bank accounts to satisfy
     expenses arising from the rental properties belonging
     to William and Gertrude Van Eck. * * *
                              - 15 -

     Walter testified that, from 1982 through mid-1987, he

received loans from Gertrude, his mother.   He testified that

Gertrude would deposit loan funds into Conn-7044.    Gertrude did

not testify.   The parties, however, have stipulated as to how

Gertrude would have testified had she been called.   The parties

have stipulated that, in part, she would have testified as

follows:

     During the tax years at issue, and through the 1993
     year, she made loans to Walter and Friedgard Van Eck in
     such amounts and under such circumstances, as were
     reflected in Walter Van Eck's testimony on these
     matters. Gertrude Van Eck's testimony would have been
     entirely consistent with Walter Van Eck's testimony on
     the issue of the loans;

     Respondent attempts to impeach the testimony of Walter and

Gertrude by questioning the financial ability of Gertrude and

William, Walter's father, to make loans to Walter in the amounts

claimed by him.   For example, respondent points out that, in

1993, William and Gertrude made an offer in compromise of their

Federal income tax liabilities for 1986 and 1988 through 1990.

Such liabilities totaled approximately $45,000, and William and

Gertrude offered $10,000.   In support of their offer in

compromise, William and Gertrude claimed a negative net asset

value.   The parties differ as to whether Gertrude told

respondent's agent that she made no loans to Walter during 1986

and 1987 except for a few small transfers of under $1,000 or

whether she gave the agent a schedule reflecting no loans after

mid-1984.   Respondent also attempts to impeach the testimony of
                               - 16 -

Walter by attacking his veracity.    In evidence is an affidavit of

Walter's made in connection with his divorce from Kosydar.     Joint

Exhibit 136-EF.    That affidavit is dated July 17, 1987.   In that

affidavit, Walter declares, among other things: (1) "The number

and amount of loans * * * from my parents has steadily decreased,

and has reached the point of zero" and (2) "My parents' financial

condition has deteriorated sharply in the last years, and they

are virtually insolvent, with no cash assets of any kind

available."

     The parties have stipulated that, if Gertrude were to

testify, she would testify that, during 1991 and other years, she

borrowed money from third parties and, thereby, was able to make

loans to Walter.

     There is no question but that the amounts shown on Exhibit

201-GK as GVE Loans (the GVE Loans) represent deposits to bank

accounts of Walter's.    We have said:   "A bank deposit is prima

facie evidence of income and respondent need not prove a likely

source of that income."    Tokarski v. Commissioner, 87 T.C. 74, 77

(1986).   Here, however, we know the source of the deposits, at

least in the sense of knowing from whom they came, Walter's

mother.   Given the conclusions naturally to be drawn from a

transfer of funds from a parent to a child, respondent does not

rest on the fact of the deposits as establishing income.

Respondent posits the necessary further inquiry as to the GVE

Loans and other amounts received from family members as follows:
                                - 17 -

     did Walter Van Eck receive hundreds of thousands of
     dollars in loans and gifts from family members during
     the tax years at issue, or is he engaged in some income
     producing activity which he and his relatives are
     concealing from respondent?

Respondent speculates as to that income producing activity:

     The Van Eck family, as one integrated unit, could be
     selling anything from molded plastic products [a
     business of Walter's brother Jan, whose business
     ventures respondent describes as "generally not
     successful"] to prescription medication [Walter's
     parents were both physicians]. * * * Walter Van Eck
     could be selling anything from tax and financial
     management services to money laundering systems
     developed on his computers. * * *

Specifically, respondent argues that portions of the GVE Loans

(and certain other amounts from either Gertrude or William)

should be deemed compensation from Gertrude or William for

property management services.    Indeed, Walter testified that,

although he did not have specific recall, withdrawing funds from

Conn. account 7044 for fees due for management services would be

the way such fees would be paid by his mother.    Respondent has

computed management fees due Walter from his parents and Keith

Martin to be at least:

                    Year             Amount
                    1982             $2,072
                    1983                757
                    1984              1,527
                    1986                303
                    1987              1,887

Respondent also argues that other portions of the disputed

deposits may be deemed fees paid to Walter for tax management and
                                 - 18 -

tax shelter services rendered to his parents.     Respondent

suggests no amounts for such services.

     Suspicions are not proof.     The GVE Loans were received by

Walter from his mother.     Neither gifts nor loans constitute items

of gross income.     Sec. 102(a) (gross income does not include

gifts); e.g., Ettig v. Commissioner, T.C. Memo. 1988-182 (bank

deposits in question were, in fact, loan proceeds received from

taxpayer's mother and, thus, not items of gross income).       Except

to the extent that there is a reason to believe to the contrary,

we believe that the transfers from Walter's mother into Walter's

bank accounts were either gifts or loans.     We have found to the

contrary to the extent that respondent has convinced us that

Walter received fees for management services.2    Except to that

extent, Walter has carried his burden of proof that the GVE Loans

do not constitute items of gross income to him.

     4.     Triad Distribution

                           FINDINGS OF FACT

     In 1982, a bank check in the amount of $1,000 drawn on Triad

Distribution Co. was deposited by Gertrude into Conn. account

7044.     The amount shown on Exhibit 201-GK in the row labeled

"Triad Distribution" reflects that deposit (the Triad deposit).

2
     We recognize that respondent maintains that the management
fees in question constitute fees received from Gertrude, Walter,
and Keith Martin. Walter has not shown what portion is allocable
to Gertrude and, because of the relative smallness of the amounts
involved, we have not estimated. But cf. Cohan v. Commissioner,
39 F.2d 540, 543-544 (2d Cir. 1930).
                                   - 19 -

                                   OPINION

       On brief, respondent states:     "But for its alleged corporate

origin, this deposit is indistinguishable from the deposits

classified as 'GVE Loans.'"     We agree.    The Triad deposit does

not constitute an item of gross income to Walter.

       5.   WFVE Gifts and Loans

                           FINDINGS OF FACT

       The $2,000 amount shown on Exhibit 201-GK in the row labeled

"WFVE Gifts" reflects a deposit into Conn. account 7044 in 1982

of $2,000 received from William, Walter's father.

       On September 16, 1986, a checking account in the name of

W. Van Eck was opened in Oregon, at Oregon Bank, account number

18129148 (OB account 9148).        W. Van Eck stands for William Van

Eck.    OB account 9148 served as Walter's personal account from

the time it was opened until at least the time of trial.         The

$100 amount shown on Exhibit 201-GK in the row labeled "WFVE

Gifts" reflects a deposit into OB account 9148 in 1986 of $100

received from William.

       The $6,000 amount shown on Exhibit 201-GK in the row labeled

"WFVE Loans" reflects a deposit into Conn. account 7044 in 1983

of $6,000 received from William.

       On September 15, 1986, a checking account in the name of

William F. Van Eck was opened in Oregon, at First Interstate

Bank, account number 564 0 05127 6 (FIB account 1276).        Walter

made all of the deposits to FIB 1276 during 1986 and 1987.
                                - 20 -

Walter signed all of the checks drawn on FIB 1276 during 1986 and

1987.     On March 9, 1987, a check in the amount of $10,000 drawn

on an account of William's at First Bank of New Haven was

deposited to FIB account 1276.     On March 19, 1987, a check drawn

on FIB account 1276 to Walter Van Eck was deposited to an account

of Friedgard's at U.S. National Bank.     The $10,000 amount shown

on Exhibit 201-GK in the row labeled "WFVE Loans" reflects the

deposit into FIB account 1276, on March 9, 1987, of the $10,000

check drawn on William's account at First Bank of New Haven.

                                OPINION

     The amounts shown on Exhibit 201-GK as WFVE Loans and WFVE

Gifts (the WFVE Loans and Gifts) represent deposits to bank

accounts under the control of Walter:     in essence, Walter's

accounts.     Respondent's arguments with respect to the WFVE Loans

and Gifts are precisely the same as with respect to the GVE

Loans, and our response is precisely the same.     The WFVE Loans

and Gifts do not constitute items of gross income to Walter.

     6.     Reprographics Plastics Deposits

                           FINDINGS OF FACT

        On October 30, 1985, a checking account in the name of

Reprographics Plastics Corporation (Reprographics) was opened in

Oregon, at U.S. Bank, account number 155-0010-894 (USB account

0894).     Walter prepared and signed all checks, made all of the

deposits, and maintained all of the bank records for USB account
                               - 21 -

0894.    During 1985, 1986, and 1987, payments were made from USB

account 0894 for the benefit of Walter and Friedgard.

     Reprographics was a Canadian corporation during the years at

issue.    Jan, Walter's brother, was president of Reprographics.

Reprographics has never been registered as an entity authorized

to do business in the State of Oregon.

     The amounts shown on Exhibit 201-GK in the row labeled

"Reprographics Plastics" reflect certain deposits to USB 0894.

The amounts remaining in dispute as Reprographics Plastics'

deposits (the Reprographics Plastics's deposits) are as follows3:

                      Year             Amount
                      1985           $1,200.00
                      1986            8,333.80
                      1987           35,000.00


The Reprographics Plastics' deposits were deposited to USB

account 0894 during the years indicated.    All of the

Reprographics Plastics' deposits constitute items of gross income

to Walter.

                               OPINION

     Respondent's theory is that the Reprographics Plastics'

deposits were expended for the benefit of Walter and Friedgard


3
     Except with regard to 1987, our findings agree with entries
for 1985 through 1987 in the row labeled "Reprographics Plastics"
on Exhibit 201-GK. The discrepancy arises because of
respondent's concession on brief that "$7,500 of the $42,000
total 1987 disputed Repro deposits should be eliminated as a
gross income item." We accept that concession.
                              - 22 -

and, thus, constitute items of gross income to them.     Walter and

Friedgard contest that the Reprographics Plastics' deposits were

expended for their benefit and, indeed, contest that such funds

were available to them at all:   "Walter Van Eck had only trust

authority over the Reprographics Plastics monies.    Not only did

he not use any of it for personal purposes, none of it was

available to him for such purposes."

     Petitioners have not convinced us that Walter only had

"trust authority" with regard to USB account 0894.   Clearly, he

had control over the account, in the sense that he made all

deposits to the account, wrote all checks, and kept the records

with regard to the account.   In testimony, Walter answered yes to

the question of whether he managed the account.   We have no

adequate reason to believe that Walter's authority with respect

to USB account 0894 was restricted in any way.    He has shown us

nothing establishing him as a fiduciary with respect to USB

account 0894.   Walter failed to produce his brother, Jan, to

corroborate that Walter's authority was limited in any way.     We

may infer by Walter's failure to call Jan that Jan's testimony

would not have been favorable to Walter.   Tokarski v.

Commissioner, 87 T.C. 74, 77 (1986) (quoting Blum v.

Commissioner, 59 T.C. 436, 440-441 (1972); "the fact that

petitioner did not offer any corroborative testimony * * * or

offer any explanation for not so doing weighs against him."); see

also Quita v. Commissioner, T.C. Memo. 1988-309 (taxpayers'
                              - 23 -

failure to offer corroborative testimony that they held funds as

nominees is a significant factor in determining that they failed

to carry their burden of proof).   We conclude that USB account

0894 was Walter's account, maintained in the name of

Reprographics.

     Walter testified that Reprographics conducted no business in

the United States except that it purchased certain second

mortgages.   Checks written on USB account 0894 from November 1985

through December 1987 are in evidence.   Some of those checks

clearly fail to relate to the purchase of second mortgages.     For

example, USB account 0894 check numbers 6902 and 6907, in the

amounts of $1,200 and $2,000, respectively, were issued in

December 1985, and drawn to "Northwest Dance Center".    On brief,

with no citation to the record, petitioners explain those checks

as loans, apparently unsecured, "to help a struggling arts

group".   USB account 0894 check number 6979, in the amount of

$1,500, was issued in October 1986, and drawn to "Walter J. Van

Eck".   On brief, petitioners claim, with the citation of nothing

other than the letters "ln" on the check, that such check

represented a loan to Walter (subsequently repaid).    As to

numerous checks that, on brief, petitioners concede were mortgage

payments on properties owned by them, petitioners argue that such

checks were payments on the "Universal Finance second mortgage"

that Reprographics "was purchasing on contract (see the
                               - 24 -

discussion at proposed finding #XIX)."     Petitioners have made no

such proposed finding.

     We have found that the Reprographics Plastics' deposits were

deposited to USB account 0894.    We are convinced that Walter had

control and authority over USB account 0984 that amounted to

ownership of that account.   As we have stated, bank deposits are

prima facie evidence of income.     Tokarski v. Commissioner, supra

at 76.    Petitioners have failed to rebut the prima facie evidence

that the Reprographics Plastics' deposits were gross income to

Walter.   Moreover, petitioners deny that, during 1985, 1986, and

1987, payments were made from USB account 0894 for the benefit of

one or the other (or both) of them.     We have found to the

contrary.    Thus, even if we assume that Walter was not the owner

of USB account 0894, petitioners have failed to prove that some,

or all, of the expenditures made from that account were not gross

income to one or the other of them.     We sustain respondent's

determinations of deficiencies to the extent based on the

Reprographics Plastics' Deposits.

     7.   Unknown Source Deposits

            a.   1982

                          FINDINGS OF FACT

     During at least the first 5 months of 1982, Walter and

Kosydar (his then wife) maintained a joint checking account in

Oregon, at U.S. Bank, account number 155-0501-348 (USB account
                              - 25 -

1348).   Among other deposits, rents for properties jointly owned

by Walter and Kosydar were deposited to that account.     During

1982 through 1984, there existed in Oregon a checking account in

the names of William F. and Walter J. Van Eck, at First

Interstate Bank, account number 564 0 02579 8 (FIB account 5798).

Walter made all the deposits to and signed all checks drawn on

that account.   The amount shown on Exhibit 201-GK in the row

labeled "Unknown", for 1982, reflects certain deposits to USB

1348 and FIB 5798 during 1982.4   The amount remaining in dispute

as unknown deposits for 1982 (1982 Unknown Deposits) is $34,752.5

Of that amount, all but $500 was deposited to USB account 1348;

$500 was deposited to FIB account 5798.

     The 1982 Unknown Deposits constitute commission, interest,

and rental income to Walter in the amount of $13,636.

Additionally, the 1982 Unknown Deposits constitute gross income

to Walter in the amount of $8,000.     In total, the 1982 Unknown

Deposits constitute gross income to Walter in the amount of

$21,636.




4
     And a $7.05 deposit to another account, which we have
disregarded because of its small size.
5
     I.e., the $52,848.48 shown on Exhibit 201-GK in the row
labeled "Unknown", for 1982, less the amounts conceded by
respondent in the Second Supplemental Stipulation of Facts,
pars. 4 and 5, $9,385 and $8,704, respectively, not to be unknown
deposits, and the $7.05 described in the immediately preceding
footnote.
                              - 26 -

                              OPINION

     Respondent proposes that we find as a fact that the 1982

Unknown Deposits "are rents and land sale contract proceeds".

Petitioners have objected specifically to respondent's proposal

in a way that has aided us in making our finding as to amount of

1982 Unknown Deposits that constitute gross income to Walter.

     Petitioners concede that $1,142.75 of the 1982 Unknown

Deposits represents a commission check that is gross income to

Walter.   Petitioners concede that the 1982 Unknown Deposits

represent rent and interest with respect to real property sales

(RP10142 and RP19547) in the amounts of $784 and $1,240 (total

$2,024) and that one-half, $1,012, is taxable to Walter (the

other half being taxable to Kosydar).   Petitioners concede that

the 1982 Unknown Deposits represent rental income in the amount

of $22,961, one-half of which, $11,481, is taxable to Walter (the

other half being taxable to Kosydar).   We accept petitioners'

concessions, and, based thereon, have found that the 1982 Unknown

Deposits constitute commission, interest, and rental income to

Walter in the amount of $13,636.6


6
     On brief, petitioners challenge respondent's concession in
the Second Supplemental Stipulation of Facts, pars. 4 and 5, that
the interest income there described, in the amounts of $9,385 and
$8,704, should reduce the amount shown on Exhibit 201-GK for 1982
as unknown deposits. This challenge would seem to be against
petitioners' interest. Since we have not found total gross
income from unknown deposits for 1982 in excess of 1982 Unknown
Deposits, we feel no pressure to resolve the conflict in the
parties' positions, and we do not.
                               - 27 -

     Petitioners argue that $16,941 of the 1982 Unknown Deposits

represents loan proceeds, which, for that reason, are not

taxable.    As to $15,000 of that amount, deposited to USB account

1348, petitioners proffer entries on two stipulated exhibits,

Exhibits 170-FN and 171-FO, both rental property listings,

prepared by Walter in December 1982 and in September 1983,

respectively, which show nothing more than certain estimated

mortgage balances.   Petitioners offer nothing from the record

showing that $15,000 in loan proceeds constitutes part of the

1982 Unknown Deposits.   As to the remaining $1,941, petitioners

have satisfied us that such amount does constitute the proceeds

of loans.   The $15,000 item is a deposit to USB account 1348 that

petitioners have failed adequately to explain.     Because USB

account 1348 was a joint account held by Walter with Kosydar, we

believe that only one-half of that amount ($7,500) constitutes an

item of gross income to Walter.    Cf. Tokarski v. Commissioner,

87 T.C. 74 (1986).    We have found accordingly.

     Finally, petitioners argue that $500 for the 1982 Unknown

Deposits were deposited into an account of William Van Eck's and,

therefore, cannot be taxable to Walter.    The account in question,

FIB account 5798, is in the name of William and Walter.     We have

found that Walter made all the deposits and signed all checks

drawn on that account.    William was not called to testify to

Walter's lack of authority over the account.    From William's
                                - 28 -

failure to testify, we can draw a negative conclusion.    See

Tokarski v. Commissioner, supra at 77.    We believe that Walter

had control, and thus ownership, of FIB account 5798.    As we have

stated, bank deposits are prima facie evidence of income.

Tokarski v. Commissioner, supra at 76.    Accordingly, the $500

deposit to FIB 5798 constitutes an item of gross income to

Walter.

     We sustain that part of respondent's determination of a

deficiency for 1982 that is based on the 1982 Unknown Deposits to

the extent we have found that the 1982 Unknown Deposits

constitute gross income to Walter.

     b.   1983

                           FINDINGS OF FACT

     During 1983 and 1984, there existed in Oregon a checking

account in the names of Gertrude J. Vermande (Walter's mother)

and Walter J. Van Eck, at First Interstate Bank, account number

564 0 03155 0 (FIB account 1550).    Walter made all the deposits

to and signed all checks drawn on that account.

     Respondent originally classified certain deposits to FIB

account 1550 and to two additional accounts, FIB account 5798

(discussed supra paragraph 7.a.) and USB account 2221 (discussed

supra paragraph 3), as being deposits of unknown origin (the

Original 1983 Unknown Deposits).    The Original 1983 Unknown

Deposits are as follows:
                                - 29 -

                   Account                Amount
                   FIB 1550               $6,494
                   FIB 5798                1,450
                   USB 2221                1,180
                      Total               $9,124

     The amount shown on Exhibit 201-GK for 1983 in the row

labeled "Unknown" ($658.44) reflects that portion of the Original

1983 Unknown Deposits still in dispute as unknown deposits for

1983 (1983 Unknown Deposits).    The 1983 Unknown Deposits

constitute an item of gross income to Walter.



                                OPINION

     The 1983 Unknown Deposits are less than the Original 1983

Unknown Deposits because Walter has conceded that $8,466 of the

Original 1983 Unknown Deposits constitutes an item of gross

income to him for 1983, and respondent has conceded that the

amount conceded by Walter no longer is a deposit of unknown

origin for 1983.   We accept those concessions and so find.

However, the parties have not told us out of which accounts the

conceded amount is deemed to have come.    That, however, is of no

consequence because we conclude that Walter owned the three

accounts in question.   We have found that Walter made all the

deposits to and signed all checks drawn on FIB account 1550.     We

have found similarly with regard to FIB account 5798 (supra

paragraph 7(a)).   We also have found that USB account 2221 was an

account maintained by Walter in his own name (supra paragraph 3).
                               - 30 -

Clearly, he had control and authority with regard to USB account

2221, which was in his own name.   We have determined that he had

control and authority over FIB account 5798 (supra paragraph

7(a)).   In the case of FIB account 1550, which was in the names

of Walter and Gertrude, he had control, and Gertrude was not

called to testify to his lack of authority.    From her failure to

testify, we can draw a negative conclusion.    See Tokarski v.

Commissioner, 87 T.C. 74, 77 (1986), Quita v. Commissioner, T.C.

Memo. 1988-309.   We conclude that Walter had the authority to use

the funds in that account as he saw fit.     We are convinced that

Walter had control and authority over all three accounts that

amounted to ownership of the accounts.   Walter has failed to

carry his burden of proving that the 1983 Unknown Deposits do not

constitute an unreported item of gross income for 1983.     Tokarski

v. Commissioner, supra.   We have found accordingly.    We sustain

that part of respondent's determination of a deficiency for 1983

that is based on the 1983 Unknown Deposits.

           c.   1984

                          FINDINGS OF FACT

     During portions of 1984 and 1985, Friedgard maintained a

checking account in Oregon, in her own name, at First Interstate

Bank, account number 104-0-03005-8 (FIB account 0058).    FIB

account 0058 was Friedgard's personal account.
                                - 31 -

     Respondent originally classified certain deposits to FIB

account 0058 and to two additional accounts, FIB account 1550

(discussed paragraph 7.b., supra) and USB account 2221 (discussed

paragraph 3, supra), as being deposits of unknown origin (the

Original 1984 Unknown Deposits).    The Original 1984 Unknown

Deposits are as follows:

                     Account              Amount
                     FIB 0058               $668
                     FIB 1550              7,738
                     USB 2221              1,100
                        Total             $9,506

     The amount shown on Exhibit 201-GK for 1984 in the row

labeled "Unknown" ($4,588.25) reflects that portion of the

Original 1984 Unknown Deposits still in dispute as unknown

deposits for 1984 (1984 Unknown Deposits).    Of the 1984 Unknown

Deposits, $4,589 constitutes an item of gross income to Walter.

                                OPINION

     The 1984 Unknown Deposits are less than the Original 1984

Unknown Deposits because Walter has conceded that $4,917 of the

Original 1984 Unknown Deposits constitutes an item of gross

income to him for 1984, and respondent has conceded that the

amount conceded by Walter no longer is a deposit of unknown

origin for 1984.   We accept those concessions and so find.

However, the parties have not told us out of which accounts the

conceded amount is deemed to have come.    We conclude, as we did

for 1983, that Walter had control and authority over FIB account
                                - 32 -

1550 and USB account 2221 that amounted to ownership of those

accounts.   We do not, however, conclude that he had any control

and authority over FIB account 0058, Friedgard's personal

account.

Walter has the burden of proving the extent to which the $4,917

that he conceded is an item of gross income reduces the Original

1984 Unknown Deposits to FIB account 1550 and USB account 2221.

Walter has failed to prove any such reduction.     Thus, we find

that the such conceded amount ($4,917) reduces the Original 1984

Unknown Deposits to FIB account 0058 to the extent thereof, $668,

and only the remainder, $4,249 ($4,249 = $4,917 - $668), reduces

the Original 1984 Unknown Deposits to FIB account 1550 and USB

account 2221.   The Original 1984 Unknown Deposits to those two

accounts totaled $8,838 ($8,838 = $7,738 + $1,100).     After taking

into account the conceded amount allocated thereto, the 1984

Unknown Deposits remaining in those accounts is $4,589 ($4,589 =

$8,838 - $4,249).   We conclude that, with respect to such

deposits ($4,589), Walter has failed to carry his burden of

proving that these deposits do not constitute an unreported item

of gross income for 1984.     Tokarski v. Commissioner, supra.     We

have found accordingly.     We sustain that part of respondent's

determination of a deficiency for 1984 that is based on the 1984

Unknown Deposits to the extent we have found that the 1984

Unknown Deposits constitute gross income to Walter.
                                   - 33 -

          d.     1985

                            FINDINGS OF FACT

     From March 1985 through at least 1986, a checking account

was maintained in Oregon, in Friedgard's name, at First

Interstate Bank, account number 564-0-04092 4 (FIB account 0924).

A portion of the funds deposited to FIB account 0924 were

transferred from FIB account 0058 (discussed in paragraph 7.b.,

supra).   During a portion of 1985, Walter maintained a checking

account in Oregon, at U.S. Bank, account number 155-0501-843 (USB

account 1843).

     Respondent originally classified certain deposits to FIB

account 0924, USB account 1843, and FIB account 0058, as being

deposits of unknown origin (the Original 1985 Unknown Deposits).

The Original 1985 Unknown Deposits are as follows:

                        Account              Amount
                        FIB 0924               $370
                        USB 1843                350
                        FIB 0058              2,113
                           Total             $2,833

     The amount shown on Exhibit 201-GK for 1985 in the row

labeled "Unknown" ($808.75) reflects that portion of the Original

1985 Unknown Deposits still in dispute as unknown deposits for

1985 (1985 Unknown Deposits).       Of the 1985 Unknown Deposits, $350

constitutes an item of gross income to Walter.

                                   OPINION

     The 1985 Unknown Deposits are less than the Original 1985

Unknown Deposits because Walter has conceded that $2,024 of the
                              - 34 -

Original 1985 Deposits constitutes an item of gross income to him

for 1985, and respondent has conceded that the amount conceded by

Walter no longer is a deposit of unknown origin for 1985.    We

accept those concessions and so find.    However, the parties have

not told us out of which accounts the conceded amount is deemed

to have come.   We conclude that Walter had control and authority

over USB account 1843 that amounted to ownership of that account.

We do not, however, conclude that he had any control and

authority over FIB accounts 0058 and 0924, the accounts in

Friedgard's name.   As was true for 1984, Walter has the burden of

proving the extent to which the $2,024 that he conceded is an

item of gross income reduces the Original 1985 Unknown Deposits

to USB account 1843.   Walter has failed to prove any such

reduction.   Thus, we find that the such conceded amount ($2,024)

reduces the Original 1985 Unknown Deposits to FIB accounts 0058

and 0924 to the extent thereof, $2,483 ($2,483 = $370 + 2,113),

and, since nothing remains, nothing reduces the Original 1985

Unknown Deposits to USB account 1843.    Accordingly, the full $350

of Original 1985 Unknown Deposits to USB account 1843 remains as

1985 Unknown Deposits to that account.   We conclude that, with

respect to such deposits ($350), Walter has failed to carry his

burden of proving that these deposits do not constitute an

unreported item of gross income for 1985.    Tokarski v.

Commissioner, 87 T.C. 74 (1986).   We sustain that part of

respondent's determination of a deficiency for 1985 that is based
                                  - 35 -

on the 1985 Unknown Deposits to the extent we have found that the

1985 Unknown Deposits constitute gross income to Walter.

           e.   1986

                           FINDINGS OF FACT

     From March 1985 through 1987, there existed in Oregon a

checking account in the names of Gertrude J. Vermande, Walter's

mother, at First Interstate Bank, account number 564 0 04005 3

(FIB account 0053).     Walter made all the deposits to, and signed

all checks drawn on, that account.         FIB account 0053 was opened

to replace FIB account 1550 (discussed in paragraph 7.b., supra).

During portions of 1986 and 1987, there existed in Oregon a

savings account in the name of R. Hodges, Friedgard's mother, at

Oregon Bank, account number 18134604 (OB account 4604).

     Respondent originally classified certain deposits to FIB

account 0053 and OB account 4604 (and a deposit of $18.25 to

another account, which we will disregard because of its small

size) as being deposits of unknown origin (the Original 1986

Unknown Deposits).     The Original 1986 Unknown Deposits are as

follows:

                       Account         Amount
                       FIB 0053         $857
                       OB 4604           835
                          Total       $1,692

     The amount shown on Exhibit 201-GK for 1986 in the row

labeled "Unknown" ($1,544, after subtracting the $18.25 we have

disregarded) reflects that portion of the Original 1986 Unknown

Deposits still in dispute as unknown deposits for 1986 (1986
                                - 36 -

Unknown Deposits).    Of the 1986 Unknown Deposits, $857

constitutes an item of gross income to Walter.

                                OPINION

     The 1986 Unknown Deposits are less than the Original 1986

Unknown Deposits because Walter has conceded that $147.79 of the

Original 1986 Unknown Deposits constitutes an item of gross

income to him for 1986, and respondent has conceded that the

amount conceded by Walter no longer is a deposit of unknown

origin for 1986.   We accept those concessions and so find.

However, the parties have not told us out of which accounts the

conceded amount is deemed to have come.    We conclude that Walter

had control and authority over FIB account 0053, as we did for

the predecessor account, FIB account 1550 (see discussion supra

paragraph 7.b.).     We do not, however, conclude that he had any

control and authority over OB account 4604, the Hodges account.

As was true for 1984 and 1985, Walter has the burden of proving

the extent to which the $147.79 that he conceded is an item of

gross income reduces the Original 1986 Unknown Deposits to FIB

account 0053.   Walter has failed to prove any such reduction.

Thus, we find that the such conceded amount ($147.79) reduces the

Original 1986 Unknown Deposits to OB account 4604 to the extent

thereof, $835, and, since nothing remains, nothing reduces the

Original 1986 Unknown Deposits to FIB account 0053.    Accordingly,

the full $857 of Original 1986 Unknown Deposits to FIB account

0053 remains as 1986 Unknown Deposits to that account.     We
                               - 37 -

conclude that, with respect to such deposits ($857), Walter has

failed to carry his burden of proving that such deposits do not

constitute an unreported item of gross income for 1986.     Tokarski

v. Commissioner, supra.    We have found accordingly.   We sustain

that part of respondent's determination of a deficiency for 1986

that is based on the 1986 Unknown Deposits to the extent we have

found that the 1986 Unknown Deposits constitute gross income to

Walter.

            f.   1987

                          FINDINGS OF FACT

     During 1987, a checking account was maintained in Oregon, at

First Interstate Bank, in the name of R. Hodges, account number

564 0 01353 6 (FIB account 3536).    Funds in that account were

owned by Friedgard, and the account was used by her for personal

purposes.    During 1987, a checking account was maintained in

Oregon, at Oregon Bank, in the name of R. Hodges, account number

18128730 (OB account 8730).    Funds in that account were owned

one-half by Walter and one-half by Friedgard, and the account was

used by them for personal purposes.     During 1987, a checking

account was maintained in Oregon, at U.S. Bank, in the name of

Friedgard V.B. Van Eck, account number 155-0812-109 (USB account

2109).    USB 2109 was used by Walter as a business checking

account.    During a portion of 1987, a checking account was

maintained in Oregon, at U.S. Bank, in the name of William F. Van

Eck, account number 155-0045-155 (USB account 5155).     During
                                - 38 -

1987, Walter made all deposits to and signed all checks on

USB 5155.

     Respondent originally classified certain deposits to the

accounts set forth in the immediately preceding paragraph and to

four additional accounts, FIB account 0053 (discussed supra

paragraph 7.e.), OB account 9148 (discussed supra paragraph 5),

OB account 4604 (discussed supra paragraph 7(e)) and an account

identified only as "FIB-4941", as being deposits of unknown

origin (the Original 1987 Unknown Deposits).    The Original 1987

Unknown Deposits are as set forth in Exhibit 106-DB.

     The amount shown on Exhibit 201-GK for 1987 in the row

labeled "Unknown" ($4,746.84) is the same as the 1987 Original

Unknown Deposits and reflects that all of the Original 1987

Unknown Deposits are still in dispute as unknown deposits for

1987 (1987 Unknown Deposits).    Of the 1987 Unknown Deposits,

$4,497 constitutes an item of gross income to either Walter or

Friedgard.

                                OPINION

     Except with regard to OB account 4604 and the account that

respondent has identified only as FIB-4941, we conclude that

Walter had control and authority over all of the accounts listed

under the heading "Unknown" on Exhibit 106-DB.    We do not,

however, conclude that he had any control and authority over FIB-

4941 or OB account 4604.   Thus except with regard to the deposit

to OB 4604 of $160 and the deposit to FIB-4941 of $89.81,
                                  - 39 -

petitioners have failed to carry their burden of proving that the

1987 Unknown Deposits do not constitute an unreported item of

gross income for 1987.       Tokarski v. Commissioner, 87 T.C. 74

(1986).    We have found accordingly.       We sustain that part of

respondent's determination of a deficiency for 1987 that is based

on the 1987 Unknown Deposits to the extent we have found that the

1987 Unknown Deposits constitute gross income to Walter.

     8.    Nondeposited Amounts

                             FINDINGS OF FACT

     During the years indicated, Walter received the following

amounts of rental income, which he did not deposit to any bank

account:

                      Year                   Amount
                      1982                   $359.00
                      1983                  1,485.43
                      1984                    552.00

                                  OPINION

     On Exhibit 201-GK, under the heading "Additional Income", in

columns headed 1982 through 1985, are certain amounts that

respondent claims are income items that Walter received but did

not deposit in any bank account and failed to report as income.

Most of those amounts are labeled as rent.         Three items (two for

1982 and one for 1985) are not labeled as rent.         Respondent

supports her inclusion in gross income of the items under the

heading of "Additional Income" with the following proposed

finding of fact:
                              - 40 -

          Walter Van Eck did not always deposit rents he
     collected into the Bank Accounts. The amounts of rent
     he did not deposit into any of the 24 Bank Accounts
     during the years 1982 through 1986 [1985] years [sic]
     were at least $1,164, $1,485.43, $552, and $3,000,
     respectively.

Respondent's citations to the record in support of that finding

do not support any particular amounts of undeposited and

unreported rents for 1982 through 1985.   Additional findings

proposed by respondent do support respondent's conclusion that

Walter did fail to deposit and report some rent for each of 1982

through 1985.

     Petitioners object to respondent's proposed finding set out

above as follows:

     Walter Van Eck deposited all rents received, even cash
     rents (Tr. XIX). Very occasionally, he used some of
     the cash before making the deposit, in which case he
     replaced the cash with new cash, obtained by writing a
     check to "Cash," so that the full rent deposit could be
     made. (TR. XIX).

We cannot identify the indicated pages of the transcript and

conclude that petitioners have failed to rebut the conclusion to

be drawn from respondent's proposed finding that Walter failed to

deposit and report some rents.   Petitioners have raised our

suspicion that not all of the amounts labeled as "Additional

Income" are rental income.   The $3,000 amount shown for 1985 as

"19556 Payment" appears to be a payment with regard to a property

transaction that respondent concedes is not a taxable amount.

See Supplemental Stipulation of Facts paragraph 21 and Second

Supplemental Stipulation of Facts paragraph 33.   Accordingly, we
                               - 41 -

have found as rent items constituting gross income only those

amounts labeled as "Rental Income".     We sustain respondent's

determinations of deficiencies for 1982 through 1985 that are

based on the "Additional Income" set forth on Exhibit 201-GK only

to that extent.

Deductions

     1987 Schedule E Loss

     On Schedule E attached to petitioners' 1987 U.S. Individual

Income Tax Return, petitioners claimed a loss from rental

property (identified as "office 10245 Wilsonville, Wilson") of

$1,936.02.   Respondent disallowed that loss on the ground, among

others, that petitioners had not established that the property

was anything other than their personal residence.     On brief, in

objection to respondent's proposed finding of fact that

petitioners claimed Walter's office in petitioners' home as a

rental property, petitioners argue that the loss in question

represents management expenses attributable to rental properties,

but not directly attributable to a specific rental property.

Petitioners have failed to carry their burden of proving that

they incurred the expenses in question or that, indeed, they

related to any rental properties owned by one or the other (or

both) of them.    Respondent's disallowance is sustained.
                               - 42 -

     Other Rental Deductions

     Respondent has proposed as a finding of fact that

petitioners are entitled to deductions for rental property

expenses and mileage in the following aggregated amounts:

                       Year               Amount
                       1982             $7,528.00
                       1983              2,072.92
                       1984              2,234.76
                       1985              4,887.57
                       1986                562.15
                       1987              7,256.86

We find accordingly.    Petitioners have failed to prove that they

incurred any additional rental property expenses or mileage.    No

further deduction for rental property expenses or mileage is

allowed.

Additions to Tax

     1.    Failure to File

     Respondent determined section 6651(a)(1) additions to tax

against Walter for his 1982 through 1986 taxable years.   Section

6651(a)(1) provides that, in the case of a failure to file an

income tax return by the due date, there shall be imposed an

addition to tax for such failure of 5 percent of the amount of

tax, reduced by timely payments and credits under section

6651(b)(1), for each month or portion thereof during which the

failure continues, not exceeding 25 percent in the aggregate,

unless such failure is due to reasonable cause and not due to

willful neglect.
                               - 43 -

     Petitioners have failed to prove either that Walter timely

filed income tax returns for the years in question or that his

failure was due to reasonable cause and not due to willful

neglect.    At trial, Walter testified that, on account of

proceedings with respect to his divorce from Kosydar, documents

necessary for him to file his returns were presented as exhibits

and kept as exhibits by "the court" until 1986.    Walter did not

detail the records that were submitted to a court nor show that

he took any steps to consult those records in order to prepare

his returns.    He did not show that the records submitted were

indispensable for him to file his returns.    He did not show the

dates on which particular documents were submitted in relation to

the due dates for his returns.    He did not show that he lacked

duplicates of any indispensable documents, nor did he show that

he took reasonable steps to obtain or reconstruct indispensable

data from other sources.    Respondent's additions to tax under

section 6651(a)(1) are sustained.

     2.    Negligence

     Section 6653(a) imposes one or more additions to tax where

an underpayment of tax is due to negligence or intentional

disregard of rules or regulations (hereafter, without

distinction, negligence).    Respondent has determined additions to

tax for negligence with respect to all years.    Section

6653(a)(1), for returns due in 1989, section 6653(a)(1)(A), for

returns due in 1987 and 1988, and section 6653(a)(1), for returns
                              - 44 -

due in 1982 through 1986, impose an addition to tax equal to

5 percent of the entire underpayment if any portion of such

underpayment is due to negligence.     Section 6653(a)(1)(B), for

returns due in 1987 and 1988, and section 6653(a)(2) for returns

due in 1982 through 1986, impose an addition to tax equal to

50 percent of the interest payable under section 6601 with

respect to the portion of the underpayment due to negligence.

"Negligence is lack of due care or failure to do what a

reasonable and ordinarily prudent person would do under the

circumstances."   Neely v. Commissioner, 85 T.C. 934, 947 (1985)

(quoting Marcello v. Commissioner, 380 F.2d 499, 506

(5th Cir. 1967), affg. in part, revg. in part 43 T.C. 168

(1964)).

     Walter's 1982 through 1986 returns were not timely filed.

Inasmuch as there were no timely filed returns for those years,

the amounts shown on timely filed returns are zero, and the

underpayments equal the entire tax liability.     Emmons v.

Commissioner, 92 T.C. 342, 348-349 (1989), affd. 898 F.2d 50 (5th

Cir. 1990).   Where, as here, an underpayment is caused by the

taxpayer's failure to timely file an income tax return, such

underpayment is due to negligence if the taxpayer lacks

reasonable cause for such failure.     See id. at 349.   As discussed

in connection with section 6651(a)(1), Walter has not shown

reasonable cause for his failure to timely file his 1982 through

1986 returns, and, therefore, we have found lack thereof.
                              - 45 -

Accordingly, the entire underpayments for the years 1982 through

1986 are due to negligence, and we sustain respondent's additions

to tax under section 6653(a) for such years.

     Petitioners have made no specific argument with regard to

the additions to tax for negligence for 1987 and 1988.

Petitioners have failed to carry their burden of proving that

they were not negligent.   Accordingly, the entire underpayments

for the years 1987 and 1988 are due to negligence, and we sustain

respondent's additions to tax under section 6653(a) for such

years.


                                         Decision will be entered

                                    under Rule 155.
                                                     - 46 -

         APPENDIX
                                                                                       11/19/93
                                                  WALTER VAN ECK
                                         DISPUTED DEPOSITS/ITEMS OF INCOME

                               1982        1983         1984         1985          1986         1987
                           ---------------------------------------------------------------------------
    RENTAL INCOME:
                226             $0.00       $0.00         $0.00        $0.00        $0.00    $3,485.00
              462-463        2,598.04        0.00          0.00         0.00         0.00         0.00
               1024          1,864.00        0.00          0.00         0.00         0.00         0.00
               1217          2,574.70        0.00          0.00         0.00         0.00       404.12
               1517          3,888.17        0.00          0.00         0.00         0.00         0.00
               1685              0.00        0.00      2,380.00         0.00         0.00       300.00
               1815          2,832.00        0.00          0.00         0.00         0.00         0.00
               2815          2,628.00        0.00          0.00         0.00         0.00         0.00
               3634          1,932.00        0.00          0.00         0.00       690.00     1,285.00
               3640          2,974.00        0.00          0.00         0.00         0.00         0.00
               3641          1,585.00        0.00          0.00         0.00         0.00         0.00
               3647          1,750.00        0.00          0.00         0.00     1,291.00     4,543.12
               3652          3,208.00        0.00          0.00         0.00         0.00         0.00
               4803          1,565.00        0.00          0.00         0.00     1,050.00     4,204.78
               4807            750.00        0.00          0.00         0.00       175.00     1,400.00
               5031          3,705.80        0.00          0.00         0.00         0.00         0.00
               5825          2,192.00        0.00          0.00         0.00         0.00         0.00
               19547         2,500.00        0.00          0.00         0.00         0.00         0.00
               19567             0.00        0.00      2,972.00         0.00         0.00         0.00
           MISC RENTS            0.00        0.00          0.00         0.00         0.00         0.00
                           ---------------------------------------------------------------------------
   TOTAL RENT INCOME       $38,546.71       $0.00     $5,352.00        $0.00    $3,206.00   $15,622.02
WVE WAGES FROM PRRS              0.00        0.00          0.00         0.00         0.00         0.00
MANAGEMENT/SET UP FEES           0.00        0.00          0.00         0.00         0.00         0.00
INTEREST EARNED--LOANS           0.00        0.00          0.00         0.00         0.00         0.00
10142 CONTRACT                   0.00        0.00          0.00         0.00         0.00         0.00
16074 CONTRACT                   0.00        0.00          0.00         0.00         0.00         0.00
19547 CONTRACT                   0.00        0.00          0.00         0.00         0.00         0.00
19556 CONTRACT                   0.00        0.00          0.00         0.00         0.00         0.00
MFC SALES                        0.00        0.00          0.00         0.00         0.00         0.00
TRIAD DISTRIBUTION           1,000.00        0.00          0.00         0.00         0.00         0.00
3203 PAYMENTS                    0.00        0.00          0.00         0.00         0.00         0.00
REPROGRAPHICS PLASTICS           0.00        0.00          0.00     1,200.00     8,333.80    42,500.00
UNKNOWN                     52,848.48      658.44      4,588.25       808.75     1,562.25     4,746.84
GVE LOANS                   32,564.84   23,741.95     48,008.70    49,389.93    39,872.48    38,965.80
WFVE GIFTS                   2,000.00        0.00          0.00         0.00       100.00         0.00
WFVE LOANS                       0.00    6,000.00          0.00         0.00         0.00    10,000.00
                           ---------------------------------------------------------------------------
TOTALS                    $126,960.03 $30,400.39     $57,948.95   $51,398.68   $53,074.53 $111,834.66

ADDITIONAL INCOME:

                                1982        1983         1984          1985         1986        1987
                         ----------------------------------------------------------------------------
5825 RENTS, PER WVE NOTES      $50.00
5825 RENTS, PER WVE NOTES      309.00
10142 CONTRACT, PER CK REG.    560.00
   USB-1843, 9/29/83
UNKNOWN SOURCE                 245.00
   USB-1843, 10/19/83
462-3 RENT FOR 5/83,                       721.80
   USB-1843, 6/22/83
462-3 RENT FOR 6/83,                       763.63
   USB-1843, 7/22/83
19567 RENTS, RECEIPT #5448                             $545.60
19567 RENTS, RECEIPT #5449                                6.40
19556 PAYMENT,                                                       3,000.00
   USB-0894, 12/10/85
                            --------------------------------------------------------------------------
TOTAL INCOME NOT DEPOSITED $1,164.00 $1,485.43         $552.00      $3,000.00      $0.00       $0.00

                            --------------------------------------- ------------------------------------
INTEREST EARNED ON THE
     --10142 CONTRACT:           $0.00       $0.00        $0.00         $0.00      $0.00          $0.00
     --16074 CONTRACT:        9,384.79        0.00         0.00          0.00       0.00           0.00
19556 CONTRACT:
       PAYMENT BOOK #36       8,704.20        0.00         0.00          0.00       0.00           0.00
                                                 - 47 -
       PAYMENT BOOK #41           0.00    0.00       0.00    0.00    0.00    0.00
       NOTE                       0.00    0.00       0.00    0.00    0.00    0.00
INTEREST EARNED, (VICKIE)                            0.00
  TOTAL CONTRACT INTEREST   $18,088.99   $0.00      $0.00   $0.00   $0.00   $0.00
