David T. Tunkl

Opinion

United States Tax Court

T.C. Memo. 2026-83

DAVID T. TUNKL,

Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

__________

Docket No. 3990-25. Filed September 10, 2026.

__________

James M. Mather and Steven Ray Mather, for petitioner.

Janna L. Johnson and Laura J. Mullin, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

LANDY, Judge: In a Notice of Deficiency (Notice) dated February 27, 2025, the Commissioner of Internal Revenue (Commissioner) determined a $5,142,307 deficiency in David T. Tunkl’s federal income tax for taxable year 2018 (year in issue). 1 After concessions, the sole issue for decision is whether Mr. Tunkl received and failed to report $16.5 million in income as the sole shareholder of Ganymede International, Inc. (Ganymede). 2 For the reasons discussed below, we determine that the $16.5 million received by Ganymede was income that

1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C. (Code), in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.

2 Mr. Tunkl contends in his Petition that the Notice was not issued within the

period of limitations on assessment. See § 6501(a). At trial, Mr. Tunkl conceded that the Notice was timely. The parties further agree that the adjustments to Schedule A, Itemized Deductions, and Schedule E, Supplemental Income and Loss, are computational.

Served 09/10/26

[*2] should have been reported by Mr. Tunkl on his Form 1040, U.S. Individual Income Tax Return, for the year in issue.

FINDINGS OF FACT

I. Mr. Tunkl’s Background

After graduating from UCLA in 1977, Mr. Tunkl began working as an art dealer, and in 1979 he opened his own gallery and began doing business as David Tunkl Fine Art. Mr. Tunkl operated as an art broker for over 45 years, representing buyers and sellers in various transactions. During the year in issue Mr. Tunkl was the sole shareholder of Ganymede, a subchapter S corporation that he organized in 2014, but he did business informally as David Tunkl Fine Art. While invoices and documents bore the name David Tunkl Fine Art, David Tunkl Fine Art did not have a bank account; and all money received went into Ganymede’s JPMorgan Chase bank account. Mr. Tunkl used the JPMorgan Chase bank account for both business and personal expenses.

II. Business Transactions with Robert Mnuchin

Mr. Tunkl became acquainted with Robert Mnuchin, a retired Goldman Sachs banker who opened the Mnuchin Gallery, LLC (Gallery), a prestigious commercial art gallery in New York City. Mr. Tunkl and Mr. Mnuchin began a business relationship wherein Mr. Tunkl purchased paintings and sculptures for the Gallery, which were later resold for profit. Before the year in issue, Mr. Tunkl participated in 13 transactions with Mr. Mnuchin, totaling between $100 and $200 million. Mr. Tunkl identified three specific transactions where he purchased a painting for Mr. Mnuchin at a low price that was subsequently sold for a substantial profit. Given their relationship and industry practice, Mr. Tunkl and Mr. Mnuchin rarely executed written agreements for their business deals.

III. Purchase of the Picasso Painting

Mr. Tunkl discussed purchasing the Pablo Picasso painting Man with Ice Cream Cone (Picasso painting) from a third-party art dealer. Mr. Tunkl believed that he could purchase the Picasso painting for $18.5 million and then resell it for a substantial profit because he had found an interested Swiss buyer willing to pay a big price for it. In late 2017 Mr. Tunkl approached Mr. Mnuchin about participating in the Picasso painting deal because he could not purchase the painting himself.

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[*3] Mr. Tunkl testified that the transaction was a “connected deal”; Mr. Mnuchin was an investor who never intended to purchase the Picasso painting for his own use, and both parties understood the transaction to be a joint venture designed to make a profit.

The parties agreed that Mr. Mnuchin would provide $16.5 million, Mr. Tunkl would finance the remaining $2 million, and they would split profits upon the eventual resale. After purchasing the Picasso painting, Mr. Tunkl would then either sell the painting to the Swiss buyer for $30.5 million, or alternatively, would sell the painting to the Swiss buyer for $18.5 million and would receive from the Swiss buyer the Jean Dubuffet painting Paris Circus, worth $13 million. The parties would each be repaid their initial investments and then split profits 25% to Mr. Tunkl and 75% to Mr. Mnuchin on the first $30 million and then in equal shares on any additional profits. The parties did not execute any contract or otherwise memorialize the terms of this arrangement at the time of the transaction. Notwithstanding the lack of written documentation, Mr. Tunkl later became obligated to repay Mr. Mnuchin his $16.5 million once the parties failed to consummate the Picasso painting deal. While it was understood Mr. Tunkl would use the wired funds to consummate the deal, Mr. Mnuchin did not place any specific restrictions on Mr. Tunkl’s use of the $16.5 million at the time the money was wired to Ganymede.

In an invoice dated January 10, 2018, Mr. Tunkl requested that the Gallery pay him $16.5 million for the Picasso painting. The invoice provided the wiring information for the money to be deposited in Ganymede’s JPMorgan Chase bank account. The invoice was not created at the time the funds were wired in January 2018 but instead was created months later in May 2018 and backdated at Mr. Mnuchin’s insistence. In accordance with the parties’ oral agreement, on January 11, 2018, the Gallery sent the $16.5 million to Ganymede via electronic transfer to its JPMorgan Chase bank account.

IV. Mr. Tunkl’s Simultaneous Art Deals

While Mr. Tunkl was negotiating the Picasso painting deal, he was also working on purchasing the Francis Bacon painting Figure Turning (Bacon painting) and another contemporary painting. With respect to the contemporary painting, Mr. Tunkl planned to sell the painting for $250 million, resulting in a potential commission between $15 and $18 million. For various reasons, the contemporary painting

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[*4] deal did not close, and Mr. Tunkl did not earn his anticipated commission.

Mr. Tunkl began negotiating the purchase of the Bacon painting in August 2017. On August 7, 2017, Mr. Tunkl, as Ganymede’s president, signed an Agreement of Sale with a Belizean art gallery to purchase the Bacon painting for $21.85 million. Under the terms of the agreement, Ganymede was required to pay for the Bacon painting in two installments. The first installment of $4.4 million was due on August 14, 2017. The second installment of $17.45 million was due on January 10, 2018. If Ganymede failed to pay the second installment on or before January 10, 2018, the agreement would terminate and the Belizean art gallery would keep the $4.4 million as liquidated damages.

On January 16, 2018, Ganymede wired $17.4 million from its JPMorgan Chase bank account to a Swiss bank account to complete the Bacon painting deal. Because Mr. Mnuchin did not place any restrictions on the $16.5 million, Ganymede used the funds it received to satisfy the second installment due on the Bacon painting. Mr. Tunkl felt comfortable using the $16.5 million, on behalf of Ganymede, because he thought he could earn a sufficient commission on the Bacon painting and the contemporary painting deals to repay Mr. Mnuchin if the Picasso painting deal fell through. Without Mr. Mnuchin’s funds, neither Ganymede nor Mr. Tunkl could complete the Bacon painting transaction and would be liable for liquidated damages.

V. The Failed Picasso Painting Deal and the Demand Note

On or after April 30, 2018, Mr. Tunkl learned that the owner of the Picasso painting was no longer interested in selling. Mr. Tunkl, realizing that he lacked the funds to repay Mr. Mnuchin, “found [himself] in a very compromised situation.” As a result, Mr. Tunkl flew to New York City in June 2018 to tell Mr. Mnuchin in person that “things had gone very, very wrong.” During the meeting in New York, Mr. Mnuchin’s legal team presented Mr. Tunkl with an Agreement, dated June 14, 2018, stating that Mr. Tunkl personally and David Tunkl Fine Art were indebted to Mr. Mnuchin and the Gallery for a total of $44 million. The Agreement listed six paintings, including the Picasso painting, which the Gallery had engaged Mr. Tunkl to sell or purchase. As of the date of the Agreement, Mr. Tunkl failed to satisfy his obligations relating to the six listed paintings.

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[*5] The Agreement further provided that “any and all opportunities presented to [Mr. Tunkl] or otherwise identified by [Mr. Tunkl] to purchase artwork from third parties [would] be offered first to the Gallery.” If the Gallery accepted an opportunity to purchase a piece of art from a third party, Mr. Tunkl was required to “facilitate the transaction and work to ensure that the transaction [was] successfully consummated.” Mr. Tunkl’s negotiated fee pursuant to the Agreement was 10%, with the remaining 90% reserved for the Gallery in partial satisfaction of the outstanding debt. The Agreement did not include the parties’ previously agreed-upon terms regarding the Picasso painting transaction. Finally, if Mr. Tunkl failed to meet his obligations under the Agreement, the Gallery could commence a civil action to recover the debt owed by Mr. Tunkl after December 31, 2018.

Attached to the Agreement was a Demand Note (Note). In executing and signing the Note, Mr. Tunkl promised to pay the Gallery the outstanding $44 million, “on demand without interest.” The Note further provided that the $44 million “shall become immediately due and payable upon notice to [Mr. Tunkl].” Lastly, the Agreement was binding and enforceable “until the Note [had] been satisfied in full.” The Note did not state any repayment schedule or terms, interest, or loan maturation date. Mr. Tunkl signed both the Agreement and the Note. Mr. Tunkl signed these documents because he “felt like [he] was in no position to fight [Mr. Mnuchin] on this stuff.”

In an Addendum dated December 21, 2018, the parties agreed to amend their prior Agreement because “no payments [had] been made by [Mr. Tunkl] toward satisfaction of the indebtedness.” The Addendum broke the original Note down into four smaller notes, although the total amount Mr. Tunkl owed remained the same. Despite this Addendum, Mr. Tunkl failed to make substantial payments on any of the four notes. In a subsequent Agreement, dated June 10, 2019, Mr. Tunkl agreed to transfer and assign to Mr. Mnuchin 80% of his 16.5% equity interest in a U.K. company in partial satisfaction of his $44 million debt. The total value of the interest was $2.5 million, which is the only amount Mr. Tunkl has ever paid Mr. Mnuchin to satisfy the outstanding debt.

VI. Filing of the Tax Returns and IRS Examination

For the year in issue, Robert Seltzer prepared and filed Form 1120S, U.S. Income Tax Return for an S Corporation, for Ganymede and Form 1040 for Mr. Tunkl. Ganymede’s 2018 Form 1120S reported an ordinary business loss of $1,696,516. Ganymede did not report the $16.5

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[*6] million received from the Gallery in any manner on its 2018 Form 1120S. Mr. Tunkl, as Ganymede’s sole shareholder, reported the entire amount of Ganymede’s ordinary business loss on Schedule 1, Additional Income and Adjustments to Income, attached to his 2018 Form 1040. Subsequently, the IRS selected Mr. Tunkl’s 2018 Form 1040 for examination. The Commissioner determined that Mr. Tunkl failed to report all income received from Ganymede during the year in issue and sent Mr. Tunkl the Notice. While residing in California, Mr. Tunkl timely filed his Petition on March 31, 2025.

OPINION

I. Burden of Proof in Unreported Income Cases

The Commissioner’s determination set forth in a Notice of Deficiency is presumed correct, and the taxpayer bears the burden of proving that the determination is in error. Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). In cases of unreported income, the Commissioner must establish “some evidentiary foundation” connecting the taxpayer with the income-producing activity, see Weimerskirch v. Commissioner, 596 F.2d 358, 361–62 (9th Cir. 1979), rev’g 67 T.C. 672 (1977), or otherwise demonstrate that the taxpayer received unreported income, see Edwards v. Commissioner, 680 F.2d 1268, 1270–71 (9th Cir. 1982) (per curiam). The Commissioner may satisfy this requirement by introducing evidence that the taxpayer received the unreported income. Hardy v. Commissioner, 181 F.3d 1002, 1004 (9th Cir. 1999), aff’g T.C. Memo. 1997-97. Once the Commissioner meets this threshold requirement, the burden shifts to the taxpayer, who must establish by a preponderance of the evidence that the deficiency determination was erroneous. Id.

The Commissioner has met his threshold burden. The parties stipulated that Ganymede maintained a bank account at JPMorgan Chase, and that Ganymede received the $16.5 million deposit to this bank account from the Gallery on January 11, 2018. Mr. Tunkl, as the sole shareholder of Ganymede, in turn received any flowthrough business income or losses. Mr. Tunkl did not allege or establish that the burden of proof should shift to the Commissioner under section 7491(a). Accordingly, the burden rests with Mr. Tunkl to establish that the $16.5 million was not income to him and that the Commissioner’s determination was erroneous. For the reasons set forth below, we determine that Mr. Tunkl has not met this burden.

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[*7] II. Whether the $16.5 Million Is Gross Income

A. General Legal Principles

Gross income includes all income from whatever source derived, unless excluded by law. § 61(a); Treas. Reg. § 1.61-1(a); accord Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429–31 (1955). “A gain ‘constitutes taxable income when its recipient has such control over it that, as a practical matter, he derives readily realizable economic value from it.’” James v. United States, 366 U.S. 213, 219 (1961) (quoting Rutkin v. United States, 343 U.S. 130, 137 (1952)). A taxpayer has dominion and control when the taxpayer is free to use the funds at will. Rutkin, 343 U.S. at 137.

On January 11, 2018, Ganymede received $16.5 million from the Gallery as part of the Picasso painting deal. As a cash method taxpayer, Mr. Tunkl was required to include this in Ganymede’s gross income unless the receipt was nontaxable. See Treas. Reg. § 1.451-1(a). Mr. Tunkl does not deny Ganymede received the $16.5 million from Mr. Mnuchin and further testified that Mr. Mnuchin placed no restrictions on his use of the funds. Mr. Tunkl used the $16.5 million at will and derived economic benefit from it because he was unable to purchase the Bacon painting without those funds. As a result, the $16.5 million is taxable income to Mr. Tunkl, as Ganymede’s sole shareholder, unless an exclusion applies. Mr. Tunkl advances two arguments for why the $16.5 million is not included in his gross income.

B. Whether the $16.5 million Is a Nontaxable Customer Deposit

Mr. Tunkl first contends that the $16.5 million was a customer deposit from Mr. Mnuchin and thus is excluded from gross income. The Commissioner, however, disagrees and maintains that the $16.5 million was a taxable advance payment. “Advance payments of income are includable in gross income in the year the advance payment is received.” Oak Indus., Inc. & Subs. v. Commissioner, 96 T.C. 559, 563–64 (1991) (first citing Schlude v. Commissioner, 372 U.S. 128 (1963); then citing Am. Auto. Ass’n v. United States, 367 U.S. 687 (1961); and then citing Auto. Club of Mich. v. Commissioner, 353 U.S. 180 (1957)). A deposit is not income to the recipient. Id. (first citing Indianapolis Power & Light Co. v. Commissioner, 857 F.2d 1162, 1165 (7th Cir. 1988), aff’g 88 T.C. 964 (1987), aff’d, 493 U.S. 203 (1990); and then citing Commissioner v. Indianapolis Power & Light Co., 493 U.S. at 207–08).

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[*8] “Whether . . . customer deposits are the economic equivalents of advance payments, and therefore taxable upon receipt, must be determined by examining the relationship between the parties at the time of the deposit.” Commissioner v. Indianapolis Power & Light Co., 493 U.S. at 212 (emphasis added); see also Oak Indus., 96 T.C. at 568. Relevant factors in making this determination include the taxpayer’s obligation to repay the money or, alternatively, their ability to keep the money. Commissioner v. Indianapolis Power & Light Co., 493 U.S. at 209, 212; see also Kan. City S. Indus., Inc. v. Commissioner, 98 T.C. 242, 261 (1992) (explaining that deposits acquired subject to an express obligation to repay were not within the complete dominion of the recipient); Oak Indus., 96 T.C. at 567–68, 577.

Mr. Tunkl and Mr. Mnuchin, given their prior successful dealings, did not memorialize in writing anything relating to the Picasso painting deal before or at the time the money was wired. As a result, the only evidence to assist us in discerning the parties’ rights and obligations at the time the funds were transferred is Mr. Tunkl’s testimony, emails from April 2018 between Mr. Tunkl and Gallery staff laying out the profit split arrangement, and documents created months after payment was wired. The sparse evidence before us falls woefully short of supporting Mr. Tunkl’s contention that this was a customer deposit.

First, the relationship between Mr. Tunkl and Mr. Mnuchin at the time the funds were wired demonstrates that Mr. Mnuchin was Mr. Tunkl’s joint investor and partner in the Picasso painting deal, not his customer. 3 The parties engaged in other deals together where

3 We acknowledge that “joint venture” and “partner” as used in this Opinion

are terms of art for federal tax purposes. Section 761(a) defines a partnership as “includ[ing] a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on, and which is not . . . a corporation or a trust or estate.” See also § 7701(a)(2). Section 7701(a)(2) provides that “the term ‘partner’ includes a member in such a syndicate, group, pool, joint venture, or organization.” “A partnership is . . . an organization for the production of income to which each partner contributes one or both of the ingredients of income—capital or services.” Commissioner v. Culbertson, 337 U.S. 733, 740 (1949).

In determining whether Messrs. Tunkl and Mnuchin formed a joint venture and thus, a partnership for federal tax purposes, we typically consider eight nonconclusive factors. See Luna v. Commissioner, 42 T.C. 1067, 1077–78 (1964). However, the parties presented no credible evidence sufficient for us to determine whether (1) a joint venture was formed and (2) any provisions of subchapter K of the Code apply. Furthermore, neither party advanced these legal arguments at trial or on brief. See United States v. Sineneng-Smith, 140 S. Ct. 1575, 1579 (2020) (“In our adversarial system of adjudication, we follow the principle of party presentation. As

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[*9] Mr. Tunkl sold paintings on behalf of the Gallery for a profit and earned a commission. Notably, Mr. Tunkl was not being paid a commission by Mr. Mnuchin to act as broker in the Picasso painting deal. The intent was always to acquire the Picasso painting using funds from both parties and subsequently resell for a profit. At the time of resale, each investor would be repaid for his investment and then they would split excess profits accordingly. Mr. Tunkl did not provide a service to Mr. Mnuchin, and at no point was Mr. Tunkl going to sell the Picasso painting to Mr. Mnuchin.

Next, Mr. Tunkl’s obligation to repay Mr. Mnuchin did not arise at the time the $16.5 million was wired. While Mr. Tunkl testified that he had an obligation to repay Mr. Mnuchin from the start, in support of this contention Mr. Tunkl offered merely his testimony, which was unreliable, unsupported, and thoroughly unconvincing. To the contrary, the documentary evidence provided to the Court (i.e., the backdated invoice, Agreement, and Note) demonstrates that Mr. Tunkl’s obligation to repay the $16.5 million did not arise until months later when the deal fell through. The parties’ business relationship supports this conclusion as well because at the time the funds were wired, Mr. Mnuchin had only enjoyed a prosperous business relationship with Mr. Tunkl, and Mr. Tunkl had reassured Mr. Mnuchin that the deal was close to consummating.

Furthermore, neither the invoice, created and backdated at Mr. Mnuchin’s insistence on or after April 30, 2018, nor any of the email correspondence between the parties, contains any mention of repayment. Mr. Tunkl assumed Mr. Mnuchin wanted the backdated invoice because “[Mr. Mnuchin] needed it for his records because . . . he realized that there was no documentation . . . when he sent me out the money and he needed that for whatever financial accounting or tax stuff he needed it for.” Presumably, if there had always been a duty to repay, Mr. Mnuchin would have included that in the terms when they were

[the Supreme Court] stated in Greenlaw v. United States, 554 U.S. 237, [243] (2008), ‘in both civil and criminal cases, in the first instance and on appeal . . . , we rely on the parties to frame the issues for decision and assign to courts the role of neutral arbiter of matters the parties present.”). Accordingly, we deem any arguments on this point conceded. See Mendes v. Commissioner, 121 T.C. 308, 312–13 (2003) (“If an argument is not pursued on brief, we may conclude that it has been abandoned.”); Petzoldt v. Commissioner, 92 T.C. 661, 683 (1989) (“Since [Mr. Tunkl] failed to argue [these points] on brief, we treat this as, in effect, a concession by [Mr. Tunkl].”).

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[*10] finally reduced to writing, especially if he needed it for accounting or tax purposes.

Finally, and most importantly, Mr. Tunkl has been permitted to keep the entire amount he received from Mr. Mnuchin. Mr. Tunkl repaid only $2.5 million of the total $44 million owed to Mr. Mnuchin. Pursuant to the Addendum, the $16.5 million owed from the Picasso painting deal was severed from the Note into its own smaller note. Mr. Tunkl has provided no evidence demonstrating that the $2.5 million was partial repayment of this smaller note. Therefore, Mr. Tunkl has failed to demonstrate that he was not permitted to keep the entire $16.5 million. Furthermore, the Agreement permitted the Gallery to pursue a civil action to recover the debt owed by Mr. Tunkl after December 31, 2018, if Mr. Tunkl failed to make payments or otherwise violated its terms. To date, no civil action has been commenced despite Mr. Tunkl’s failure to fully repay the debt or otherwise continue his business relationship with the Gallery. Given the foregoing, Mr. Tunkl has failed to prove that the $16.5 million was a nontaxable customer deposit.

C. Whether the $16.5 Million Is a Loan

Alternatively, Mr. Tunkl contends that the $16.5 million is nontaxable loan proceeds. A loan is “an agreement, either express or implied, whereby one person advances money to the other and the other agrees to repay it upon such terms as to time and rate of interest, or without interest, as the parties may agree.” Welch v. Commissioner, 204 F.3d 1228, 1230 (9th Cir. 2000) (quoting Commissioner v. Valley Morris Plan, 305 F.2d 610, 618 (9th Cir. 1962), rev’g in part 33 T.C. 572 (1959) and Morris Plan. Co. of Cal. v. Commissioner, 33 T.C. 720 (1960)), aff’g T.C. Memo. 1998-121. Because a genuine loan is accompanied by an obligation to repay, loan proceeds do not constitute income to the taxpayer. Commissioner v. Tufts, 461 U.S. 300, 307 (1983). “For disbursements to constitute true loans there must have been, at the time the funds were transferred, an unconditional obligation on the part of the transferee to repay the money, and an unconditional intention on the part of the transferor to secure repayment.” Haag v. Commissioner, 88 T.C. 604, 615–16 (1987), aff’d, 855 F.2d 855 (8th Cir. 1988) (unpublished table decision). In other words, “[a] valid loan does not exist where there is a conditional obligation to repay.” Taylor v. Commissioner, 27 T.C. 361, 368–69 (1956), aff’d, 258 F.2d 89 (2d Cir. 1958); see also Clark v. Commissioner, 18 T.C. 780, 783–84 (1952), aff’d per curiam, 205 F.2d 353 (2d Cir. 1953).

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[*11] The U.S. Court of Appeals for the Ninth Circuit, to which this case is appealable absent stipulation by the parties to the contrary, see § 7482(b)(1)(A), (2), employs a multifactor test to determine whether a transaction is a “true loan”:

(1) whether the promise to repay is evidenced by a note or other instrument; (2) whether interest was charged; (3) whether a fixed schedule for repayments was established; (4) whether collateral was given to secure payment; (5) whether repayments were made; (6) whether the borrower had a reasonable prospect of repaying the loan and whether the lender had sufficient funds to advance the loan; and (7) whether the parties conducted themselves as if the transaction were a loan.

Welch v. Commissioner, 204 F.3d at 1230.

The $16.5 million the Gallery paid to Ganymede is not a loan for federal tax purposes because the terms of the unsettled transaction bear no indicia of a loan. First and foremost, no formal obligation to repay existed on January 11, 2018, the day the funds were wired to Ganymede. To the contrary, the obligation to repay Mr. Mnuchin did not arise until June 14, 2018, the day Mr. Tunkl signed the Agreement. Neither the backdated invoice nor the Agreement contains any information regarding a schedule of repayment, interest, or collateral. The Note is the first written documentation demonstrating that Mr. Mnuchin intended to recover the $16.5 million from Mr. Tunkl. The Note explicitly states that Mr. Tunkl must repay Mr. Mnuchin the total outstanding liability “on demand without interest.” Likewise, the Note contains no schedule of repayment, providing instead that the entire liability “shall become immediately due and payable upon notice to [Mr. Tunkl].” Nothing in the Agreement or the Note indicates that Mr. Mnuchin or the Gallery required Mr. Tunkl or Ganymede to put up any collateral to secure repayment. Finally, Mr. Tunkl has repaid only $2.5 million of the total $44 million debt.

In addition, the parties did not conduct the transaction as if it was a loan. When Mr. Mnuchin wired the funds as a joint investor in the Picasso painting deal, he had no expectation that Mr. Tunkl would repay him. Rather, Mr. Mnuchin expected that he would recoup his investment by receiving a share of the profits from a subsequent resale of the Picasso painting. Mr. Mnuchin’s understanding of the transaction is evidenced by the email from Mr. Tunkl to Mr. Mnuchin on April 30,

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[*12] 2018, detailing the status of the deal and the profit split arrangement between the parties. This arrangement is further evidenced by Mr. Tunkl’s affidavit stating that he was responsible for the purchase or sale of art on behalf of Mr. Mnuchin.

In sum, nothing in this transaction demonstrates that the $16.5 million was a loan from Mr. Mnuchin to Mr. Tunkl. Accordingly, we reject Mr. Tunkl’s contention.

III. Conclusion

Mr. Tunkl failed to prove that the $16.5 million he received, and kept, from Mr. Mnuchin is excluded from gross income. As a result, we sustain the Commissioner’s determination in the Notice.

Any contentions not addressed are irrelevant, meritless, or moot.

To reflect the foregoing,

Decision will be entered for respondent.