a. Use the above chart to estimate the assets, liabilities, sources, applications, income from known sources, estimated net worth and the estimated net cash income.

b. Given the income from known sources, estimate the income from unknown sources from the Lifestyle Approach.

c. Assume that the suspect declared bankruptcy and that the bankruptcy judge closed the case on December 31 of the prior year, confirming that the suspect had no assets and forgave all of the suspects liabilities on the date the bankruptcy was closed. What is your estimated income from unknown sources using the net worth method?

d. Assume that the sources have been rated as reliable, what is your assessment of the validity of your estimate of income from unknown sources? Why?

Indirect Methods of Income from Unknown Sources Net Worth Lifestyle Income from Known Sources Description Amount Asset Liability Sources Application Boat 25,000 Boat Loan 20,000 Boat Loan Payments 5,000 Car 40,000 Car Loan 30,000 Car Loan Payments 2,000 Deposit to Bank Account 500,000 Dividends on Tax Return 5,000 Down Payment Boat 12,000 Down Payment Car 7,000 Down Payment Time Share 6,000 Down Payment Vacation Homes 15,000 Home 275,000 Home Equity Loan 35,000 Home Equity Loan Payments 4,000 Interest on Tax Return 1,000 Mortgage 150,000 Mortgage Payments 3,000 Mutual Funds 20,000 Purchase Mutual Funds 20,000 Time Share 50,000 Vacation Homes 250,000 Wages on W-2 and Tax Return 75,000 Net Worth Estimated Net Cash Income Estimated Income from Unknown Sources