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know or were not sure what each check was for. As to the
remainder of the improvements, Mr. Bettencourt admitted at trial
that he was unable to ascertain the exact amounts spent by Mrs.
Hatch in renovating the residence. He also was unable to
establish the year each of the improvements was supposedly made.
The written evidence regarding the claimed improvements was vague
at best. Mr. Bettencourt is a certified public accountant and
should have known that such improvements should have been
documented if, as petitioners contend, the expenditures
constituted capital expenditures made by Mrs. Hatch as a gift to
petitioners. When asked why he did not maintain a log of the
improvements, Mr. Bettencourt only reasoned that he did not
because they were “arm’s length” transactions between siblings,
and “they would write things down on a cash register tape, and it
would be hard for us to have a record”. The Court is not
satisfied with this explanation as it fails to address the
principal issue as to whether the improvements constituted
capital items, and whether they were intended as gifts to
petitioners. Petitioners have failed to establish that the
expenses should be added to the residence’s adjusted basis.
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Last modified: May 25, 2011