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We decide whether a witness is credible based on objective
facts, the reasonableness of the testimony, the consistency of
statements made by the witness, and the demeanor of the witness.
Quock Ting v. United States, 140 U.S. 417, 420-421 (1891); Wood
v. Commissioner, 338 F.2d 602, 605 (9th Cir. 1964), affg. 41 T.C.
593 (1964). We may discount testimony which we find to be
unworthy of belief, Tokarski v. Commissioner, 87 T.C. 74, 77
(1986), but we may not arbitrarily disregard testimony that is
competent, relevant, and uncontradicted, Conti v. Commissioner,
39 F.3d 658, 664 (6th Cir. 1994), affg. in part and remanding 99
T.C. 370 (1992) and T.C. Memo. 1992-616. The testimony of all of
petitioner's witnesses, Ann Van Tine, Ebaugh, Garrabrant, and
Andrade, was consistent and plausible. There was nothing in the
demeanor of petitioner's witnesses or the content of their
answers that suggests that they were not being truthful.
Respondent contends that we should not believe Ebaugh's
testimony because Ebaugh and Ann Van Tine lived together at the
time of trial, they shared a trust and commingled funds, and
Ebaugh paid some of petitioner's attorney's fees in this case.
We disagree. We are not convinced that Ebaugh altered her
testimony to help Ann Van Tine.
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