MacGregor v. Comm'r

T.C. Memo. 2010-187

UNITED STATES TAX COURT

BONNIE LOU MACGREGOR, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 12150-08. Filed August 23, 2010.

Bonnie Lou MacGregor, pro se.

Davis G. Yee, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

MARVEL, Judge: In a notice of deficiency dated February 11,

2008, respondent determined the following deficiencies and

additions to tax with respect to petitioner’s Federal income tax:
 - 2 -
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654

2001 $17,215 $3,873 $4,304 $688
2002 15,495 3,486 3,874 518
2003 6,171 1,388 1,419 162
2004 6,540 1,635 to be determined 190
2005 2,251 563 to be determined 90

Petitioner timely filed a petition contesting respondent’s

determinations. After concessions,1 the issues for decision are:

(1) Whether and to what extent petitioner failed to report income

for the years at issue; (2) whether and to what extent petitioner

is entitled to business expense deductions with respect to her

business activities; and (3) whether petitioner is liable for

additions to tax under section 6651(a)(1)2 for failing to file

her 2001-2005 Federal income tax returns, section 6651(a)(2) for

failing to pay her 2001-2005 Federal income tax liabilities, and

section 6654 for failing to pay estimated tax for the years at

issue.3

1
On brief petitioner states that respondent’s “estimate for
rent in 2001 and 2002 is about right, in round numbers.”
Petitioner also states that “estimates for Social Security
benefits are, I assume, correct” and the “estimate for dividends
are close enough for our purposes.” We construe these statements
as petitioner’s concessions with respect to the adjustments to
rental income in 2001 and 2002, Social Security income in 2001-
2003, and dividends in 2003.
2
Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code) in effect for the years at
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure. All monetary amounts have been rounded
to the nearest dollar.
3
Other adjustments proposed in the notice of deficiency are
(continued...)
 - 3 -

FINDINGS OF FACT

None of the facts have been stipulated because petitioner

refused to stipulate as required by Rule 91. Petitioner resided

in California when she filed her petition. During the years at

issue petitioner was not married and had no dependents.

I. Petitioner’s Background and Businesses

Petitioner graduated from college in 1961. Petitioner then

attended graduate courses in education at the University of

Washington for 1 year but did not complete her graduate degree.

Petitioner taught at the high school level, and in 1965-72 she

worked for IBM. After working for Royal Typewriter and Xerox in

the field of office automation, petitioner worked on a startup

team for a small company for 10 years. After a period of

unemployment petitioner established an independent consulting

practice. Between 1982 and 1994 petitioner owned and operated a

restaurant. At some point after 1994 petitioner became an

independent consultant in the restaurant and office management

industries.

During the years at issue petitioner, in addition to

operating her consulting business, occasionally worked part time

3
(...continued)
computational. With respect to the standard deductions allowed
for 2001, 2002, 2004, and 2005 petitioner does not assert nor
does the record allow us to conclude that the itemized deductions
are greater than the standard deduction.
 - 4 -

for some clients. Petitioner depended mostly on word-of-mouth

advertising.

Petitioner did not keep a ledger, journal, or cash receipts

book to record receipts generated by her business. Petitioner

did not routinely issue any invoices or statements to her

customers and instead told her customers what they owed.

Petitioner used her bank statements to keep track of her income.

When customers paid petitioner by check, she usually deposited

the checks at a bank. Sometimes she cashed checks and deposited

cash at the bank only when needed. Once or twice customers paid

petitioner in cash, in which case petitioner put the payment in a

box at her house and deposited the money in her bank account when

needed.

In addition to running her consulting business, petitioner

marketed educational materials, such as lectures and seminars.

Petitioner either developed the educational materials herself or

purchased them from professional groups. This business involved

mostly telemarketing. Petitioner incurred various expenses

related to this business. She purchased prospect lists and

incurred costs for online back office, online training costs, and

online referral sites. In 2001 and 2002 petitioner incurred $620

of expenses related to this business.

In 2001-2002 petitioner worked part time for Leon Felton

(Mr. Felton) managing his personal assets. Petitioner deposited
 - 5 -

in her accounts checks from Mr. Felton totaling $36,111. Of

those deposits, several checks totaling $427 and $287 in 2001 and

2002, respectively, were reimbursements for various expenses.

In 2000-2004 petitioner owned a condominium at 799 Dahlia

Street, unit 601, Denver, Colorado (Denver condominium).

Petitioner purchased the Denver condominium for $89,900.

Petitioner partially financed the purchase by a nonrecourse loan,

which was secured by a mortgage on the property. Petitioner

began renting out the Denver condominium in 2001 but evicted the

tenants at some point in 2002. In 2004 the bank foreclosed on

the property. At the time of the foreclosure sale, the balance

of the nonrecourse loan was $86,000. Besides the mortgage

interest deduction that respondent allowed, petitioner incurred

expenses related to the Denver condominium totaling $371, $5,043,

and $2,792 in 2001, 2002, and 2003, respectively.

In the 1990s petitioner invested in J-Mac Enterprises, a

real estate partnership. Petitioner owned the interest until the

partnership dissolved in 2004. Upon partnership dissolution,

petitioner received checks totaling $17,425 which she deposited

in her account.

At various points during the years at issue petitioner

maintained checking accounts in her name at Bank of America,

Northern Trust Bank of California (Northern Trust), and Bank of

Marin. In 2001-2005 petitioner also maintained a checking
 - 6 -

account at Northern Trust under the name “Highlander Clan”, which

was a trust that petitioner had set up. Petitioner was listed on

this account as a director.

Petitioner made deposits into the accounts as follows:4

2001 2002 2003 2004 2005

Northern Trust
(trust) $40,526 $33,452 $6,826 $23,819 $2,927
Northern Trust
(personal) -0- 951 100 4,471 2,388
Bank of America 34,573 2,871 -0- -0- -0-
Bank of Marin -0- 29,706 24,549 -0- -0-
Total 75,099 66,980 31,475 28,290 5,315

In 2003, 2004, and 2005 petitioner’s cash expenditures

totaled $4,150, $11,049, and $9,398, respectively.5 Petitioner

occasionally withdrew cash or wrote checks payable either to

herself or to cash. Her withdrawals were as follows:

Checks payable Total
Year Cash to cash withdrawals

2001 $1,400 $5,600 $7,000
2002 800 25,311 26,111
2003 100 1,300 1,400
2004 3,125 -0- 3,125
2005 2,064 -0- 2,064

4
Consistent with respondent’s bank deposits analysis, we do
not include returned checks, credits and refunds, interaccount
transfers, a check from Title Services, Inc., and a check marked
as “for payment of escrow to mortgagor” in the deposits analysis.
5
The record contains only the totals of the receipts, but
petitioner does not allege that respondent calculated her cash
expenditures incorrectly.
 - 7 -

II. Substitute Returns Under Section 6020(b)

Beginning with her 1999 taxable year petitioner stopped

filing Forms 1040, U.S. Individual Income Tax Return, and she

had not filed Forms 1040 to the date of trial. Petitioner never

made any estimated tax payments because “she did not know what

to estimate.”

Respondent undertook to reconstruct petitioner’s income by

analyzing petitioner’s bank deposits in 2001-2005 and cash

purchases in 2003-2005.6 Respondent treated petitioner’s cash

purchases in 2003-2005 as income on the ground that petitioner

must have had income in cash at least in the amount that she

spent which she never deposited. Respondent determined that

petitioner’s cash purchases totaled $4,150, $11,049, and $9,398

in 2003, 2004, and 2005, respectively, and he treated these

amounts as part of petitioner’s income subject to self-

employment tax.

Respondent then used the bank deposits and cash

expenditures analysis to prepare substitute returns under

section 6020(b) for petitioner’s years in issue. In the notice

of deficiency dated February 11, 2008, respondent determined

that petitioner’s taxable income was as follows:

6
Petitioner provided respondent with receipts for her
purchases, such as food, phone, clothing, and other.
 - 8 -

Year Taxable Income

2001 $59,877
2002 47,601
2003 18,885
2004 46,131
2005 3,230

Respondent also determined that petitioner was liable for

additions to tax under sections 6651(a)(1) and (2) and 6654.

Petitioner timely petitioned this Court to redetermine the

deficiencies and additions to tax. At trial respondent

introduced into evidence bank statements, copies of canceled

checks, deposit slips, withdrawal slips, and other financial

documents with respect to petitioner’s bank accounts. The

records were authenticated by the testimony of the banks’

custodians of the records.

OPINION

I. Procedural Matters

The primary issues in this case are the extent of

petitioner’s unreported income and whether petitioner is

entitled to any business deductions other than the ones

respondent allowed. Petitioner, who has the burden of proof,

see Rule 142(a), brought only a few documents to trial. She

raised a potentially legitimate cash hoard defense to the bank

deposits method of income reconstruction but failed to introduce

any credible evidence as to how much money she had on hand at

the beginning of each year at issue or what portion of that cash
 - 9 -

she deposited into her bank accounts. Petitioner testified that

she incurred various expenses for her businesses, but she did

not introduce any credible evidence regarding those expenses and

on brief failed to cite any specific references to the record to

support her assertions. When questioned by the Court about

expenses she incurred in 2003, petitioner could not recall and

stated: “I ran out of time to continue going through what I

have to make even these summary sheets like I did for ’01 and

’02. It was midnight last night when I was working on this.”

Petitioner’s lack of preparation is a problem of her own

making because she had adequate notice of the trial date.

Respondent mailed petitioner the notice of deficiency on

February 11, 2008, and petitioner mailed her petition on May 12,

2008. On December 5, 2008, more than 5 months before the trial

date, we served petitioner with a notice setting case for trial

in San Francisco, California, at the session beginning on May

11, 2009.7 Petitioner failed to comply with the Court’s orders

to prepare her case for trial and either obtain counsel or

undertake a good faith effort to prepare for trial herself.

On May 7, 2009, less than a week before the May 11, 2009,

date set for trial, the Court received petitioner’s motion for

continuance. Rule 133 provides that a motion for continuance

filed within 30 days of the trial date will be denied unless the

7
Petitioner did not recall receiving these documents.
 - 10 -

ground for continuance arose during that period or there is a

good reason for not having made the motion sooner.8 Petitioner

filed the motion on the ground that after receiving respondent’s

proposed stipulations on April 17, 2009, she realized that she

was unprepared to handle a trial by herself and would seek the

assistance of counsel. Petitioner’s motion was dilatory, and we

denied the motion. Petitioner’s delay in preparation for trial

or hiring counsel until receiving respondent’s proposed

stipulations may not serve as a ground for continuance. See

Rule 133. We explained to petitioner during a pretrial

conference call and at trial that we denied the motion because

it was untimely and because petitioner did not do anything to

prepare for trial.9

8
Rule 133 provides in part:

Continuances will be granted only in exceptional
circumstances. * * * A motion for continuance, filed
30 days or less prior to the date to which it is
directed, may be set for hearing on that date, but
ordinarily will be deemed dilatory and will be denied
unless the ground therefor arose during that period or
there was good reason for not making the motion sooner.
* * *
9
As we observed in another context in Brooks v.
Commissioner, 82 T.C. 413, 429-430 (1984), affd. without
published opinion 772 F.2d 910 (9th Cir. 1985):

The Office of the Court is in Washington, D.C., but
trial sessions are held in various cities * * * for the
convenience of the parties. Secs. 7445, 7446; Rules
10, 140. When cases are at issue, they are scheduled
on the next available calendar in the place requested
(continued...)
 - 11 -

When this case was called for trial at the calendar call,

petitioner stated that she was not ready to proceed to trial

that week. Petitioner also faxed documents entitled “Motion for

Reconsideration and Certificate of Unpreparedness”. Petitioner

sought to file the same documents again during trial. Because

such documents are not proper documents under the Rules, we

directed that the documents not be filed but construed them as a

request for continuance. We explained to petitioner during

trial that continuances are granted only in exceptional

circumstances and because petitioner did not do anything to

prepare the case for trial, we would not grant a continuance.

9
(...continued)
for trial, generally in order of filing, and notice of
trial is sent. * * * The judge, trial clerk, and
reporter are assigned, and the courtroom space is
reserved. When a case set for trial is not resolved
during a trial session in which time has been set aside
for it, a substantial waste of the Court’s resources
results.

Delays also affect other taxpayers who are
awaiting the opportunity to have their cases heard.
Only a certain number of cases can be placed on any
particular trial calendar. Each time that a case
scheduled for trial does not proceed, time is wasted
that could have been spent on other cases if they could
have been scheduled. Respondent’s counsel is required
to spend time preparing cases for trial which could be
spent working with taxpayers on other cases and
attempting to settle them. These unnecessary burdens
on the system are unreasonable and unfair from the
standpoint of everyone involved. [Citations and fn.
refs. omitted.]
 - 12 -

Throughout the calendar call and the trial and on brief

petitioner lamented that the Court “required her to defend

herself without assistance of counsel” while she is incapable of

doing so and blamed her unpreparedness on appearing without

counsel. In petitioner’s words, she “did not feel capable of

conducting * * * trial” and she could not afford counsel.10

In addition to failing to prepare for trial, petitioner

refused to cooperate with respondent’s counsel in the

stipulation process. Respondent’s counsel drafted numerous

stipulations of facts, but petitioner refused to sign them and

to stipulate the exhibits. After the calendar call, on May 15,

2009, respondent’s counsel again contacted petitioner regarding

the stipulations of facts before the trial was scheduled to

commence. However, petitioner again refused to sign the

stipulations. Instead, petitioner offered a two-paragraph

stipulation that respondent’s counsel did not sign because it

failed to encompass all of petitioner’s bank records.

As noted above, on December 5, 2008, we served petitioner

with a notice setting case for trial in San Francisco,

California, at the session beginning on May 11, 2009. The

notice directed the parties to “agree in writing to all facts

and all documents about which there should be no disagreement.”

10
At calendar call the Court encouraged petitioner to
consult one of the two volunteer attorneys who were present and
could have assisted her in reviewing stipulations.
 - 13 -

The notice was accompanied by the Court’s standing pretrial

order which required the parties to cooperate and stipulate

facts to the maximum extent possible. The standing pretrial

order states in pertinent part:

The parties shall begin discussions as soon as
practicable for purposes of settlement and/or
preparation of a stipulation of facts. * * * All
minor issues should be settled so that the Court can
focus on the issue(s) needing a Court decision.

* * * * * * *

Continuances will be granted only in exceptional
circumstances. See Rule 133, Tax Court Rules of
Practice and Procedures. (The Court’s Rules are
available at www.ustaxcourt.gov.) Even joint motions
for continuance will not routinely be granted.

* * * * * * *

To facilitate an orderly and efficient disposition of
all cases on the trial calendar, it is hereby

ORDERED that all facts shall be stipulated to the
maximum extent possible. * * * Objections may be
preserved in the stipulation. If a complete
stipulation of facts is not ready for submission at
the commencement of the trial or at such other time
ordered by the Court, and if the Court determines that
this is the result of either party’s failure to fully
cooperate in the preparation thereof, the Court may
order sanctions against the uncooperative party.

See also Rule 91(a). Petitioner’s refusal to stipulate and

failure to prepare for trial violated the Court’s standing

pretrial order.

At trial and on brief petitioner stated that she did not

know what respondent’s case would consist of, what witnesses

would testify, and what arguments respondent would rely on.
 - 14 -

Petitioner’s complaint is ungrounded. Forms 4549-A, Income Tax

Discrepancy Adjustments, attached to the notice of deficiency,

set out respondent’s adjustments. Petitioner received the Forms

4549-A along with the notice of deficiency on or after February

11, 2008, more than 1 year before the May 11, 2009, trial.

Petitioner also received respondent’s pretrial memorandum, which

set forth the issues in the case, witnesses that respondent

expected to call, summary of the facts, and synopsis of legal

authorities on which respondent relied.

II. Burden of Proof

The Commissioner’s determinations in a notice of deficiency

are presumed correct, and the taxpayer generally bears the

burden of showing they are erroneous. Rule 142(a); Welch v.

Helvering, 290 U.S. 111, 115 (1933). The U.S. Court of Appeals

for the Ninth Circuit, to which an appeal in this case would

lie, absent a stipulation to the contrary, see sec.

7482(b)(1)(A), has held that for the presumption of correctness

to attach to the notice of deficiency in unreported income

cases, the Commissioner must establish “some evidentiary

foundation” connecting the taxpayer with the income-producing

activity, see Weimerskirch v. Commissioner, 596 F.2d 358, 361-

362 (9th Cir. 1979), revg. 67 T.C. 672 (1977), or demonstrating

that the taxpayer actually received unreported income, Edwards

v. Commissioner, 680 F.2d 1268, 1270-1271 (9th Cir. 1982)
 - 15 -

(holding that the Commissioner’s assertion of a deficiency is

presumptively correct once some substantive evidence is

introduced demonstrating that the taxpayer received unreported

income). If the Commissioner introduces some evidence that the

taxpayer received unreported income, the burden shifts to the

taxpayer, who must establish by a preponderance of the evidence

that the deficiency was arbitrary or erroneous. See Hardy v.

Commissioner, 181 F.3d 1002, 1004 (9th Cir. 1999), affg. T.C.

Memo. 1997-97.

Petitioner deposited cash into her bank accounts, and bank

deposits evidence receipt of income. See Tokarski v.

Commissioner, 87 T.C. 74, 77 (1986). In addition, respondent

has introduced evidence that petitioner had income-producing

activities during the years at issue. Accordingly, the burden

of production shifted to petitioner to prove that respondent’s

adjustments in the notice of deficiency were arbitrary or

erroneous. Consequently, petitioner bears the burden of proof

and the burden of production with respect to all adjustments

affecting her liability for the tax deficiencies. In addition,

petitioner does not contend that section 7491(a) shifts the

burden of proof to respondent, nor does the record establish

that petitioner satisfies the section 7491(a)(2) requirements.
 - 16 -

III. Petitioner’s Income for 2001-2005

A. In General

Section 6001 requires a taxpayer to maintain sufficient

records to allow the determination of the taxpayer’s correct tax

liability. Petzoldt v. Commissioner, 92 T.C. 661, 686 (1989).

Petitioner failed to fulfill that responsibility.

When a taxpayer fails to keep adequate books and records,

the Commissioner is authorized to determine the existence and

amount of the taxpayer’s income by any method that clearly

reflects income. See sec. 446(b); Petzoldt v. Commissioner,

supra at 693. The Commissioner may use indirect methods, and he

is given latitude in determining which method of reconstruction

to apply when a taxpayer fails to maintain adequate books and

records. Petzoldt v. Commissioner, supra at 693. The

Commissioner’s reconstruction of a taxpayer’s income need only

be reasonable in the light of all surrounding facts and

circumstances. Id. at 687 (citing Giddio v. Commissioner, 54

T.C. 1530, 1533 (1970), and Schroeder v. Commissioner, 40 T.C.

30, 33 (1963)).

One of the indirect methods of reconstructing income is the

bank deposits method. “The use of the bank deposit method for

computing income has long been sanctioned by the courts.”

Estate of Mason v. Commissioner, 64 T.C. 651, 656 (1975), affd.

566 F.2d 2 (6th Cir. 1977). Bank deposits constitute prima
 - 17 -

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

77; see also Clayton v. Commissioner, 102 T.C. 632, 645 (1994).

When a taxpayer keeps inadequate or incomplete books or records

and has large bank deposits, the Commissioner is not acting

arbitrarily or capriciously by resorting to the bank deposits

method. See DiLeo v. Commissioner, 96 T.C. 858, 867-868 (1991),

affd. 959 F.2d 16 (2d Cir. 1992). The bank deposits method of

reconstruction assumes that all of the deposits into a

taxpayer’s account are taxable income unless the taxpayer can

show that the deposits are not taxable. See id. at 868; see

also Price v. United States, 335 F.2d 671, 677 (5th Cir. 1964).

The Commissioner need not show a likely source of the income

when using the bank deposits method, but the Commissioner must

take into account any nontaxable items or deductible expenses of

which the Commissioner has knowledge. See Price v. United

States, supra at 677.

Respondent introduced adequate evidence to show that

petitioner received unreported income in 2001-2005. The record

contains canceled checks, bank statements, deposit slips, and

other documentary evidence. Petitioner admits that at various

times during the years at issue she rented out her condominium,

engaged in the business of selling educational materials, worked

for Mr. Felton, offered services as an independent consultant,

and occasionally worked part time for various clients. We find
 - 18 -

that it was reasonable for respondent to use an indirect method,

i.e., the bank deposits and cash expenditures method, to

reconstruct petitioner’s income. Accordingly, the burden of

proof falls on petitioner to demonstrate that respondent’s

determinations are arbitrary or erroneous.

For each year at issue respondent applied the bank deposits

method. Respondent identified four bank accounts that

petitioner used in 2001-2005 and summoned the bank records.

Respondent analyzed each account and performed a bank deposits

analysis to identify unreported gross income. He totaled all

deposits into petitioner’s accounts during the years at issue.

Respondent’s revenue agent Michelle Jirasek (Ms. Jirasek)

credibly testified, and her bank deposits analysis spreadsheet

supports her testimony, that she eliminated from taxable

deposits the items that she identified as nontaxable, such as

interaccount transfers or returned checks.

With respect to 2003-2005 respondent also analyzed

petitioner’s expenditures in reconstructing her income. The

cash expenditures method assumes that the amount by which a

taxpayer’s expenditures during the relevant period exceed

reported income has taxable origins absent some explanation by

the taxpayer. Petzoldt v. Commissioner, supra at 694. The

relevant issue in a cash expenditures analysis is whether any

expenditures in excess of reported income can be attributed to
 - 19 -

assets available at the beginning of the relevant period or to

nontaxable receipts, such as loans, gifts, or inheritances. Id.

at 695 (citing Taglianetti v. United States, 398 F.2d 558, 566

(1st Cir. 1968), affd. 394 U.S. 316 (1969)).

At trial respondent introduced a spreadsheet documenting

the bank deposits and cash expenditures analysis and copies of

petitioner’s bank statements, canceled checks, and deposit

slips. The burden is on petitioner to show that respondent’s

analysis is unfair or inaccurate. See Price v. United States,

supra at 677; Petzoldt v. Commissioner, 92 T.C. at 697.

Alternatively, petitioner may demonstrate a nontaxable source

for the cash. See Price v. Commissioner, supra at 677; Petzoldt

v. Commissioner, supra at 696-697. In sum, we accept

respondent’s reconstruction of petitioner’s income as reasonable

and accurate with the exception of the items addressed below.

B. Disputed Items of Income

The following items of income remain in dispute:

Item 2001 2002 2003 2004
2006

Other income--
not subject to self-
employment tax $22,171 -0- -0- -0- -0-
Other income--subject to
self-employment tax 31,360 $44,515 $26,118 $15,878 $13,644
Capital gain -0- -0- -0- 40,525 -0-

We consider each adjustment below.
 - 20 -

1. Other Income--Not Subject to Self-Employment Tax
(2001)

Petitioner contends that the $22,171 she received in 2001

represented proceeds of a personal injury settlement and is not

taxable. Generally, section 61(a) includes in gross income “all

income from whatever source derived” unless excluded by a specific

provision of the Code. This section is construed broadly to

encompass any accession to a taxpayer’s wealth. Commissioner v.

Schleier, 515 U.S. 323, 327-328 (1995); United States v. Burke,

504 U.S. 229, 233 (1992); Commissioner v. Glenshaw Glass Co., 348

U.S. 426, 430 (1955). Exclusions from gross income are matters of

legislative grace and are construed narrowly to maximize the

taxation of any accession to wealth. United States v. Burke,

supra at 248 (Souter, J., concurring). Section 104(a)(2) excludes

from gross income “the amount of any damages (other than punitive

damages) received (whether by suit or agreement and whether as

lump sums or as periodic payments) on account of personal physical

injuries or physical sickness”.

Where damages are received pursuant to a settlement

agreement, the nature of the claim that was the basis for the

settlement determines whether the damages are excludable from

gross income under section 104(a)(2). United States v. Burke,

supra at 237. To be excludable from gross income under section

104(a)(2), a settlement award must be paid to a taxpayer on

account of physical injury or physical sickness. See, e.g.,
 - 21 -

Longoria v. Commissioner, T.C. Memo. 2009-162. The determination

of the underlying nature of the claim is factual and generally is

made by reference to the settlement agreement in the light of the

surrounding circumstances. Robinson v. Commissioner, 102 T.C.

116, 126 (1994), affd. in part, revd. in part and remanded on

another issue 70 F.3d 34 (5th Cir. 1995); Seay v. Commissioner, 58

T.C. 32, 37 (1972).

To justify excluding the $22,171 from income under section

104, petitioner must show the nature of the claim which was the

actual basis for the settlement and that her settlement proceeds

were in lieu of damages for physical injuries or physical

sickness. The record contains a copy of the check from Vasquez &

Vasquez. The check memo line notes: “MacGregor v. Alpine”.

Petitioner also attached to her brief a document entitled

“Settlement Statement” which purports to summarize the

calculation of the settlement amount. Petitioner did not offer

the settlement statement, which references medical bills and has

the handwritten notation “Foot injury”, in evidence at the trial.

A document that is attached to a posttrial brief but not admitted

into evidence at trial is not part of the record, and the

taxpayer may not rely on such a document. See Rule 143(c);

Washington v. Commissioner, 120 T.C. 114, 123 n.11 (2003).

Although petitioner appears in this proceeding pro se, her

failure to cooperate in preparing this case for trial gives us no
 - 22 -

reason to disregard our Rules. See Lopez v. Commissioner, T.C.

Memo. 2001-93. Accordingly, we sustain respondent’s determination

with respect to this adjustment.

2. Other Income--Subject to Self-Employment Tax
(2001-2005)

We summarize our findings with respect to respondent’s bank

deposits analysis in the appendix.

a. Petitioner’s Challenges

Relying on the bank deposits and cash expenditures analysis,

respondent determined petitioner’s category of income “Other

income--subject to self-employment tax” as follows:

Item 2001 2002 2003 2004 2005

Cash $5,540 $17,713 $8,843 $2,574 $1,973
Paypal -0- -0- 2,550 -0- -0-
Mr. Felton 17,654 19,117 -0- -0- -0-
I-Promotion -0- 282 605 -0- -0-
Other 6,541 7,404 9,969 2,256 2,273
Elliot Mgmt. 1,625 -0- -0- -0- -0-
Cash expenditures -0- -0- 4,150 11,049 9,398
1 1 1
Total 31,360 44,516 26,117 15,879 13,644
1
The discrepancy with the notice of deficiency is due to
rounding.

For 2003, 2004, and 2005 respondent also added cash expenditures

of $4,150, $11,049, and $9,398, respectively.

Petitioner contests respondent’s determinations of the

amounts of income subject to self-employment tax. First,

petitioner contends that the checks from Mr. Felton deposited on

March 26 and July 9, 2002, were repayments of loans she had

advanced to him. The disputed checks bear notations “IGP GII
 - 23 -

Seminar Purchase”, “IGP GI Course”, and “Final”. Petitioner made

self-serving statements in her posttrial brief in support of her

argument but presented no evidence at trial that these checks were

repayment of loans. See Tokarski v. Commissioner, 87 T.C. at 77.

Accordingly, we sustain respondent’s determination with respect to

these checks.

Second, petitioner contends that respondent failed to connect

amounts of cash deposits, “other deposits”, and cash expenditures

with an income-producing activity. Whether the Commissioner

produces evidence that the taxpayer received income affects the

allocation of the burden of proof, rather than the taxpayer’s

liability. Cf. Hardy v. Commissioner, 181 F.3d at 1004-1005. If

the Commissioner introduces some evidence that the taxpayer

received unreported income, the burden shifts to the taxpayer to

show by a preponderance of the evidence that the deficiency was

arbitrary or erroneous. Kudo v. Commissioner, 11 Fed. Appx. 864,

866 (9th Cir. 2001), affg. T.C. Memo. 1998-404; Hardy v.

Commissioner, supra at 1004. Respondent produced evidence of

unreported income, see supra p. 17, and the record contains

evidence that petitioner engaged in income-producing activities

during the years at issue. Petitioner bears both the burden of

production and the ultimate burden of proof. We reject

petitioner’s argument that respondent failed to link the

unreported income with an income-producing activity.
 - 24 -

Third, petitioner challenges respondent’s bank deposits

analysis on the ground that at trial respondent failed to explain

how he arrived at the amounts. Petitioner’s argument is

unfounded. At trial Ms. Jirasek explained how she calculated the

total amounts of income subject to self-employment tax for 2001

and 2002 and how the spreadsheet, which is part of the record,

supports her calculations. She also addressed how she calculated

petitioner’s cash expenditures for 2004 and then stated that she

used a similar process for other years. Respondent explained his

methodology with sufficient clarity, and we reject petitioner’s

argument.

b. Additional Findings With Respect to the Bank
Deposits Analysis11

Upon our review of petitioner’s bank records and

respondent’s bank deposits analysis, we also find as follows:12

11
The parties did not address the items discussed in this
part.
12
In addition to our findings in this section, we note that
we included the $660 check deposited on Mar. 21, 2002, as part of
the “other” category, rather than a payment from Mr. Felton
because the relevant check was issued to petitioner by Sausalito
Art Festival, LLC. The correction, however, does not change the
amount of income subject to self-employment tax.

Petitioner’s $100 deposit on Aug. 28, 2002, is properly
included in the “other” category of deposits rather than
nontaxable credit/refund. However, because respondent does not
assert an increased deficiency on brief with respect to this
deposit, we shall disregard the deposit in our analysis.

Petitioner’s $74 deposit dated Sept. 15, 2003, into her Bank
(continued...)
 - 25 -

• For 2002 we decreased deposits into petitioner’s Bank

of Marin account by $316, which represents the total of

checks deposited on April 11 and July 9, 2002, because

the notations on the checks show those payments were

refunds.13

• We increased petitioner’s 2003 cash deposits by a $10

deposit into Bank of Marin dated August 29, 2003,

because respondent’s summary sheet omitted that

deposit.

• We decreased petitioner’s 2001 “other” deposits into the

trust account at the Northern Trust by $10 because the

record establishes the relevant check was in the amount

of $153 but was recorded in the analysis as

$163.

• We excluded a $500 deposit dated March 8, 2004, from

deposits into petitioner’s Northern Trust personal

account because the record establishes it was a

nontaxable transfer from petitioner’s trust account at

Northern Trust.

12
(...continued)
of Marin account bears the notation “postage for volunteer
letters”, but petitioner did not argue that this deposit is
nontaxable. Because petitioner bears the burden of proof, see
Rule 142, we sustain respondent’s determination with respect to
this item.
13
As refunds, such amounts do not represent income to
petitioner, and accordingly should not be part of deposits.
 - 26 -

• We find that petitioner withdrew $500 from the trust

account on March 8, 2004, rather than $1,000 as

respondent determined.

• We find that on April 22, 2004, petitioner deposited

$354 of her Social Security check into the trust account

and withdrew $200 from the trust account. Respondent

had determined that on that date petitioner deposited

$854 and withdrew $500 from the trust

account.

• We find that on August 18, 2004, petitioner deposited

$754 of her Social Security check into the trust account

and withdrew $354. Respondent had determined that

petitioner deposited $854 and withdrew $454 from

the trust account.

• We find that on October 5, 2005, petitioner deposited

$753 of her Social Security check into the trust account

and withdrew $553. Respondent had determined

that petitioner had deposited $200.

• We exclude from the taxable deposits checks from Mr.

Felton totaling $427 and $287 that petitioner deposited

in 2001 and 2002, respectively, into her Bank of Marin

and Bank of America accounts. These checks bear

notations “reimb.-office supplies and equipment”,

“reimbursement-postage”, or a similar notation, and we
 - 27 -

find Mr. Felton reimbursed petitioner for various

supplies, postage, or similar expenses.

c. The Cash Hoard and Redeposit Defenses

Petitioner contends on brief that respondent’s bank deposits

and cash expenditures analysis is unreliable because it ignores

the cash petitioner had on hand at the beginning of 2001.

Petitioner also claims that she had some assets offshore at the

beginning of 2001.14 Petitioner claims she prefers “the

anonymity of cash” to maintain her privacy and has kept

“significant sums in cash rather than in the bank” for at least

10 years. Petitioner testified and states on brief that in 2000

she sold her houseboat at a profit of over $100,000 and kept a

large part of the proceeds in cash. Petitioner claims that she

spent $33,220 of that cash when she purchased her Denver

condominium. Petitioner also states on brief that between 2000

and 2004 she invested $102,500 but lost her investments. At

trial petitioner estimated her real estate investments made with

cash, including the proceeds from the sale of the houseboat,

totaled approximately $225,000. According to petitioner, after

her investments she had approximately $5,000 or $6,000, and on

14
Petitioner’s application for a mortgage for the purchase
of the Denver condominium indicates that her assets offshore
totaled “100M”. Petitioner acknowledges that at the beginning of
2001 she had assets offshore but disputes that “100M” referred to
$100 million. We need not resolve the dispute regarding the
amount of cash petitioner had offshore because we reject the cash
hoard defense for lack of credible evidence in the record.
 - 28 -

several occasions in 2003-2005 she deposited some of that cash

into her bank accounts. According to petitioner, she used her

“cash stash” to pay living expenses.

Petitioner failed to present any credible evidence to

corroborate her testimony. She presented no documentary evidence

that she sold her houseboat and received the proceeds in cash. No

witnesses with knowledge of petitioner’s cash at home testified at

trial. Petitioner did not explain the source of the over $200,000

she claimed she invested in real estate, nor did she credibly

quantify her gain from the sale of the houseboat; she testified

that it was $100,000. Even if we were to accept that petitioner

had cash on hand, petitioner failed to establish how much cash she

had at the beginning of each year at issue.

Although her argument is not entirely clear, petitioner

appears to challenge the bank deposits analysis on the ground

that she redeposited the cash she had withdrawn from her

accounts. The record supports a finding that in 2001-2005

petitioner withdrew $39,700 from her accounts and deposited

$35,953.15 However, on this record we cannot conclude that

petitioner’s cash deposits and withdrawals represented a circular

flow of cash. While it is possible that petitioner redeposited

15
Respondent’s bank deposits analysis includes a column for
cash withdrawals, but the analysis ignores checks written to
petitioner or to cash. Because checks written to petitioner or
to cash are equivalent to cash withdrawals, we include all such
withdrawals in our analysis.
 - 29 -

some cash, petitioner presented no credible evidence to establish

the extent of any redeposits, and the record does not allow us to

conclude that all cash deposits were in fact redeposits. It is

petitioner who bears the burden of proof, see Rule 142, and

petitioner failed to carry that burden and establish the extent of

her redeposits.

Petitioner also challenges respondent’s cash expenditures

analysis for 2003-2005 on the ground that she kept cash “outside

the banking system.” The relevant issue is whether any of

petitioner’s expenditures in 2003-2005 can be attributed to assets

available at the beginning of 2003 or to nontaxable receipts. See

Petzoldt v. Commissioner, 92 T.C. at 695 (citing Taglianetti v.

United States, 398 F.2d at 566). Petitioner testified that she

invested most of the sale proceeds and on several occasions

deposited the remaining $5,000 or $6,000 in 2003-2005 into her

bank accounts. This testimony contradicts petitioner’s proffered

explanation that she used the cash she had left after the

houseboat sale for living expenses.

The record reveals that petitioner’s withdrawals from her

bank account totaled $33,111 in 2001-2002 and $6,589 in 2003-

2005.16 However, the record contains no evidence to support a

16
On brief respondent contends that in the bank deposits
analysis he “accounted for certain cash deposits” and refers to
deposits that equaled petitioner’s cash withdrawals. However,
respondent’s bank deposits analysis shows that although
(continued...)
 - 30 -

finding that the sources of funds for the cash expenditures were

in fact petitioner’s cash withdrawals.

It is the taxpayer’s responsibility to maintain adequate

records that would allow the determination of the taxpayer’s

correct tax liability. See sec. 6001; Petzoldt v. Commissioner,

supra at 686-687; sec. 1.446-1(a)(4), Income Tax Regs. As

discussed above, the Commissioner’s determination has the

presumption of correctness, and the taxpayer bears the burden of

proof. Rule 142(a). In the absence of any credible evidence

regarding a cash hoard, cash withdrawals as the source of funds

for the cash expenditures, or redeposits, we decline to infer that

petitioner either redeposited the cash she had previously

withdrawn or paid her expenses in 2003-2005 with that cash.

3. Capital Gain (2004)

In the notice of deficiency respondent determined that in

2004 petitioner had a $40,525 capital gain. Respondent explains

that this adjustment consists of a $23,100 gain on the

foreclosure of the Denver condominium and a $17,425 gain related

to the sale of petitioner’s interest in J-Mac Enterprises.

16
(...continued)
respondent subtracted cash withdrawals from the total daily
deposits, the cash withdrawals did not affect the categories of
taxable deposits. Because respondent did not use the total daily
deposits column for calculating taxable income and instead added
specific categories to calculate petitioner’s self-employment
income, we find that respondent did not factor cash withdrawals
into his bank deposits analysis.
 - 31 -

a. Gain on the Foreclosure Sale

In general section 61(a)(3) provides that gross income

includes gains derived from dealings in property. Section

1001(a) provides that gain from the sale or other disposition of

property is the excess of the amount realized over the property’s

adjusted basis and that loss from the sale or other disposition

of property is the excess of the property’s adjusted basis over

the amount realized. The transfer of property in consideration

of the discharge or reduction of indebtedness is equivalent to

the sale of property upon which gain or loss is realized.17 See

Frazier v. Commissioner, 111 T.C. 243, 245 (1998).

For purposes of calculating gain or loss, the amount

realized is the sum of any money received plus the fair market

value of the property received. Sec. 1001(b). Generally, and

subject to exceptions not relevant in this case, the amount

realized from a sale or other disposition of property includes

the amount of liabilities from which the transferor is discharged

17
A debtor’s transfer of property to a creditor in
satisfaction of a nonrecourse liability is treated as a sale or
other disposition of property, and any resulting income
constitutes gain on the disposition of property, rather than
discharge of indebtedness income. Coburn v. Commissioner, T.C.
Memo. 2005-283. On the other hand, a debtor’s transfer of
property subject to a recourse liability results in gain from the
sale or other disposition of property to the extent that the fair
market value of the property exceeds its basis and, to the extent
that the liability exceeds the property’s fair market value, the
debtor realizes discharge of indebtedness income. Frazier v.
Commissioner, 111 T.C. 243, 245 (1998); Coburn v. Commissioner,
supra.
 - 32 -

as a result of the sale or disposition. Sec. 1.1001-2(a), Income

Tax Regs. The amount realized from the transfer of the property

in consideration of the discharge or reduction of indebtedness

depends on whether the liability is recourse or nonrecourse. See

Frazier v. Commissioner, supra at 245. If the liability is

nonrecourse, the amount realized includes the full amount of the

remaining debt, and the fair market value of the property is

irrelevant. See Commissioner v. Tufts, 461 U.S. 300, 317 (1983);

Frazier v. Commissioner, supra at 245. If the debt is recourse,

the amount realized is the fair market value of the property.

Frazier v. Commissioner, supra at 245.

The mortgage documents are not in the record. Respondent

assumed in making his determination that petitioner’s liability

was nonrecourse, and petitioner does not disagree. In fact, on

brief petitioner agrees that the amount realized was $86,000 as

respondent determined. Accordingly, we shall not disturb

respondent’s determination that the loan was nonrecourse and the

amount petitioner realized on the foreclosure sale was $86,000.

Petitioner, however, challenges respondent’s determination

that her basis in the property was $62,900. At trial Ms. Jirasek

did not remember how she had calculated petitioner’s basis and

guessed she had done so using information in the original loan

document. The original loan document is not part of the record.

The record contains only a “Uniform Residential Loan Application
 - 33 -

Charterwest Mortgage, LLC” dated April 17, 2002 (loan

application), that relates to refinancing of the Denver

condominium. The loan application shows the original cost of the

condominium was $89,900 and the amount of existing liens was

$62,900. The $89,900 original cost specified in the loan

application is consistent with petitioner’s testimony that she

paid $89,900 for the Denver condominium and that she used some

cash proceeds from the sale of her houseboat and borrowed the

rest. On the other hand, respondent’s determination that the

basis was $62,900 appears inconsistent with the loan application,

and at trial Ms. Jirasek could not explain how she had arrived at

that number. We find that petitioner’s basis was $89,900 and

petitioner had no gain on the foreclosure.

Petitioner also suggests that her basis in the Denver

condominium should include $6,000 she spent to replace the

windows. However, the record contains no credible evidence

documenting that petitioner replaced windows in the Denver

condominium or the cost thereof, and statements in brief are not

evidence. Rule 143(c). Accordingly, we conclude that

petitioner failed to prove that an adjustment to basis for window

replacements in the Denver condominium is appropriate.

b. Gain on the Sale of the Partnership Interest

Respondent determined that petitioner realized and must

recognize gain on the sale of her interest in J-Mac Enterprises
 - 34 -

on the basis of two cashier’s checks totaling $17,425.

Petitioner contends that respondent improperly treated the

cashier’s check deposits as proceeds from the sale of her

interest in J-Mac Enterprises. We disagree.

The record contains a summary of Ms. Jirasek’s interview

with petitioner on December 13, 2007. The notes show that during

the interview Ms. Jirasek asked petitioner about the deposits

from Jefferson Title Co. and that petitioner stated those

deposits were probably from the buyout of her partnership

interest. Petitioner also provided Ms. Jirasek with a Schedule

K-1, Partner’s Share of Income, Deductions, Credits, etc., for J-

Mac Enterprises for 2004, which respondent introduced into

evidence. Ms. Jirasek concluded that the proceeds were from the

sale of a partnership interest because the Schedule K-1 was

marked as a final schedule.

Petitioner also argues that respondent failed to give her

credit for any basis in the partnership interest. Petitioner,

however, did not present any evidence at trial regarding her

basis in the partnership interest, nor did she testify as to how

much she had invested in J-Mac Enterprises. Petitioner relies on

a handwritten page purporting to show her contributions to the

partnership totaling $23,150 in 1990-2003 that she attached to

her posttrial brief. The bottom of the page bears a notation:
 - 35 -

“7-03 Prepared by Kristine Jasiecki[18] & I agreed”.

Petitioner’s reliance on statements and documents that were not

introduced into evidence at trial is improper. See Rule 143(c).

We sustain respondent’s determination with respect to the capital

gain on the sale of the partnership interest for 2004.

IV. Petitioner’s Business Expenses for 2001-2005

Generally, deductions and credits are a matter of legislative

grace, and the taxpayer bears the burden of proving that she is

entitled to any deduction or credit claimed. Rule 142(a); New

Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). This

includes the burden of substantiation. Hradesky v. Commissioner,

65 T.C. 87, 89-90 (1975), affd. per curiam 540 F.2d 821 (5th Cir.

1976).

Section 162(a) allows a taxpayer to deduct ordinary and

necessary expenses of carrying on the taxpayer’s trade or

business. To be engaged in a trade or business with respect to

which deductions are allowable under section 162, “the taxpayer

must be involved in the activity with continuity and regularity”,

and “the taxpayer’s primary purpose for engaging in the activity

must be for income or profit.” Commissioner v. Groetzinger, 480

U.S. 23, 35 (1987). A sporadic activity or a hobby does not

qualify. Id. An expense is ordinary if it is normal, usual, or

18
The record establishes that Kristine Jasiecki was another
partner in J-Mac Enterprises.
 - 36 -

customary within a particular trade, business, or industry or

arises from a transaction “of common or frequent occurrence in the

type of business involved.” Deputy v. du Pont, 308 U.S. 488, 495

(1940). An expense is necessary if it is “‘appropriate and

helpful’” for the development of the business. Commissioner v.

Lincoln Sav. & Loan Association, 403 U.S. 345, 353 (1971) (quoting

Commissioner v. Tellier, 383 U.S. 687, 689-690 (1966)). Section

212 allows deductions for expenses paid or incurred in connection

with an activity engaged in for the production or collection of

income, or for the management, conservation, or maintenance of

property held for the production of income.

When a taxpayer establishes that he paid or incurred a

deductible expense but does not establish the amount of the

expense, we may estimate the amount allowable in some

circumstances (the Cohan rule). See Cohan v. Commissioner, 39

F.2d 540, 543-544 (2d Cir. 1930). There must be sufficient

evidence in the record, however, to permit us to conclude that the

taxpayer paid or incurred a deductible expense in at least the

amount allowed. See Williams v. United States, 245 F.2d 559, 560

(5th Cir. 1957). In estimating the amount allowable,

we bear heavily upon the taxpayer who failed to maintain required

records and to substantiate deductions as the Code requires. See

Cohan v. Commissioner, supra at 544.
 - 37 -

Petitioner alleges that respondent failed to allow

deductions for certain business expenses, such as property taxes,

homeowners association fees, and utilities but does not point to

any evidence in the record that identifies specific rental

business expenses that she paid. Nevertheless, the record shows

that petitioner paid expenses related to the Denver condominium

totaling $371, $5,043,19 and $2,792 in 2001, 2002, and 2003,

respectively. Notations on the canceled checks that support this

additional deduction refer to “HOA fees”, “Dahlia”, or the

partial address of the Denver condominium. Accordingly, we allow

petitioner to deduct these expenses. However, we do not allow

any deductions for expenses petitioner testified she incurred for

title insurance; replacement of an air conditioner, microwave,

and windows; patching holes in the walls; and painting the Denver

condominium, because the record contains no credible evidence to

support deductions for those expenses.

With respect to petitioner’s marketing business, petitioner

testified that she incurred expenses for purchasing educational

materials, but she failed to produce credible evidence of those

expenses at trial. The record does contain three checks totaling

$620, dated January 16, 2001, and March 28, 2002, that show

19
Petitioner testified that maintenance and repair expenses
in 2002 were $6,988.53, but she produced no records at trial.
Petitioner attached to her brief a spreadsheet summarizing, inter
alia, her expenses. However, statements on brief are not part of
the record. See Rule 143(c).
 - 38 -

petitioner purchased educational tapes. We find that these

expenses related to petitioner’s marketing business, and we allow

a deduction for these expenses.

Petitioner testified that some of her records were destroyed

by fire. She also admitted that she had some documentation but

that she had not brought it to Court. Because petitioner

introduced no credible evidence that she actually paid any

expenses other than those allowed above, the Cohan rule is not

applicable in this case.

V. Additions to Tax

Section 7491(c) provides that the Commissioner bears the

burden of production with respect to the liability of any taxpayer

for any penalty or addition to tax. To satisfy his burden of

production under section 7491(c), the Commissioner must produce

evidence that it is appropriate to impose the relevant addition to

tax. Higbee v. Commissioner, 116 T.C. 438, 446 (2001). However,

section 7491(c) does not require the Commissioner to introduce

evidence regarding reasonable cause. Id.

In a proceeding before this Court, the Commissioner’s

obligation under section 7491(c) initially to come forward with

evidence that it is appropriate to apply a particular penalty

against a taxpayer is conditioned upon the taxpayer’s assigning

error to the Commissioner’s penalty determination. Funk v.
 - 39 -

Commissioner, 123 T.C. 213, 217-218 (2004); Swain v. Commissioner,

118 T.C. 358 (2002). We have held that a taxpayer who fails to

assign error to a penalty or addition to tax is deemed under Rule

34(b)(4) to have conceded the penalty or addition to tax. See

Funk v. Commissioner, supra at 217-218 (holding that the

Commissioner’s burden of production under section 7491(c) with

regard to additions to tax is not applicable when a pro se

taxpayer’s petition failed to state a claim with respect to

additions to tax); Swain v. Commissioner, supra at 363 (holding

that a pro se taxpayer conceded penalties when she failed to

assign error to the Commissioner’s determination of penalties).

Respondent has determined that petitioner is liable for

additions to tax under sections 6651(a)(1) and (2) and 6654. The

petition contains no allegations regarding any of the additions to

tax that respondent determined in the notice of deficiency. We

deem petitioner to have conceded these issues and hold that

respondent has no burden of production under section 7491(c) as to

the additions to tax. See Funk v. Commissioner, supra at 217-218;

Swain v. Commissioner, supra at 363. We sustain respondent’s

determinations as to the additions to tax under sections

6651(a)(1) and (2) and 6654.

We have considered the remaining arguments made by the

parties and, to the extent not discussed above, conclude those
 - 40 -

arguments are irrelevant, moot, or without merit.

To reflect the foregoing,

Decision will be entered

under Rule 155.
 - 41 -
APPENDIX

Social Mr. I- Energy Elliot Court Pship.
Security Cash Paypal Rent Felton Promotion 2000 Other Mgmt. Settlement Distrib.

2001
N. Trust
(trust) -0- $3,000 -0- $12,455 $17,227 -0- -0- $6,219 $1,625 -0- -0-
Bank of
America $9,549 2,540 $1 -0- -0- -0- -0- 312 -0- $22,171 -0-
Total 9,549 5,540 1 12,455 17,227 -0- -0- 6,531 1,625 22,171 -0-

2002
N. Trust
(trust) -0- -0- -0- $11,910 $18,170 $282 -0- $3,090 -0- -0- -0-
N. trust
(personal) -0- 800 -0- -0- -0- -0- -0- 151 -0- -0- -0-
Bank of
America $1,756 $1,115 -0- -0- -0- -0- -0- -0- -0- -0- -0-
Bank of Marin 9,401 15,798 -0- -0- -0- -0- -0- 4,507 -0- -0- -0-
Total 11,157 17,713 -0- 11,910 18,170 282 -0- 7,748 -0- -0- -0-

2003
N. Trust
(trust) -0- $683 $2,550 -0- -0- $605 $1,068 $1,920 -0- -0- -0-
N. Trust
(personal) -0- 100 -0- -0- -0- -0- -0- -0- -0- -0- -0-
Bank of Marin $8,430 8,070 -0- -0- -0- -0- -0- 8,049 -0- -0- -0-
Total 8,430 8,853 2,550 -0- -0- 605 1,068 9,969 -0- -0- -0-

2004
N. Trust
(trust) $3,310 $1,454 -0- -0- -0- -0- -0- $1,630 -0- -0- $17,425
N. trust
(personal) 1,681 620 -0- -0- -0- -0- -0- 626 -0- -0- -0-
Total 4,991 2,074 -0- -0- -0- -0- -0- 2,256 -0- -0- 17,425

2005
N. Trust
(trust) $1,506 $1,400 -0- -0- -0- -0- -0- $1,564 -0- -0- -0-
N. trust
(personal) 1,306 373 -0- -0- -0- -0- -0- 709 -0- -0- -0-
Total 2,812 1,773 -0- -0- -0- -0- -0- 2,273 -0- -0- -0-