- 20 -
In any event, however, "the ultimate burden of persuasion as to
entitlement to a deduction would remain on the taxpayer." Id. at
1344.
The Court of Appeals’ holding does not aid petitioners in
this case. First, we do not accept petitioners' claims that
respondent is responsible for their failure to produce documents
relating to the Oshtemo-Kalamazoo activity. During the
development of this case, petitioners steadfastly ignored
respondent's valid requests for the production of documents. At
the beginning of trial, they conceded that they did not have the
records requested, and respondent agreed to rescind the demand
for sanctions. At no time before trial did petitioners state
that their inability to produce relevant documents was due to
respondent's loss of those records. During the trial itself, Mr.
Weiss frequently argued that, during the audit process, he had
presented respondent with records relevant to the Oshtemo-
Kalamazoo activity. Even then, Mr. Weiss did not assert that
respondent had retained, and possibly lost, their records. The
failure to make such an assertion persisted in petitioners'
opening brief. It was not until their reply brief--which, in the
normal course, would have been the last document submitted in the
case--that petitioners made such a charge. Mr. Weiss is a
certified public accountant who has testified as to his
familiarity with respondent's audit processes. He was certainly
aware of the importance of relevant documentary evidence in this
case. If petitioners believed in good faith that respondent was
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