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organize documents for Mr. Hertz to present to respondent’s
Appeals officer. However, Mr. Hertz admitted that he may have
kept the box of documents after his meeting with respondent’s
Appeals officer.
In contradistinction to Dr. Rinker’s, Mr. Hertz’s testimony
was not persuasive. Mr. Hertz testified that he showed the
source documents, which were voluminous, to the revenue agent
conducting the exam. Yet the revenue agent recalled seeing only
a few receipts and canceled checks. Mr. Hertz lacked any
detailed memory of when he last possessed petitioners’ source
documents and was unable to recall basic facts of the chronology
and events of his representation of petitioners.
We therefore find that Mr. Hertz, and not petitioners, lost
the box of petitioners’ original documents.
Petitioners prayed that the Court excuse their inability to
produce most of their contemporaneous records on the grounds that
Mr. Hertz, and not petitioners, lost most of their records.
Petitioners asked the Court to allow deductions for Dr. Rinker’s
business expenses on the basis of Dr. Rinker’s testimony and the
documents that they were able to produce at trial under the rule
in Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930).
They also argue that they should be allowed to deduct business
expenses to which section 274 applies because they have satisfied
the substantiation requirements of section 1.274-5T(c)(5),
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