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taxpayer has produced credible evidence relating to the tax
liability at issue and has met his substantiation requirements,
maintained required records, and cooperated with the Secretary’s
reasonable requests for documents, witnesses, and meetings.
Petitioners have produced no credible evidence supporting
their disputed capital transactions or their disallowed
deductions and exemption. Petitioners produced only summary
“Affidavits of Fact” that declared the accuracy of each line of
petitioners’ amended returns. Petitioners made no effort to
provide respondent with any receipts, canceled checks, copies of
invoices, or other records to substantiate the items claimed on
their amended returns that respondent disallowed. Because
petitioners failed both to cooperate with respondent and to
substantiate their losses and deductions, we conclude that
petitioners did not satisfy the requirements of section 7491(a)
and that the burden of proof remains with petitioners on all
issues.
Capital Transactions
Section 1001(c) requires all gains or losses on the sale of
capital assets to be reported on the taxpayer’s return, unless a
separate Code section provides otherwise. Although petitioners
provided some documentation during the examination to
substantiate a small capital loss for 1999, petitioners did not
substantiate the remaining losses claimed. At trial, petitioners
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