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basis is the cost of constructing the J car. Secs. 1011, 1012,
1016.
Petitioner alleges that he spent $100,000 to build the J
car. Respondent argues that petitioner has not substantiated his
basis in the J car and, therefore, cannot take the claimed
depreciation deduction.
Petitioner has no records of the expenses he incurred in
building the car. At trial, he attempted to estimate those
expenses by producing the auto shop's check stubs. Stubs were
missing for some of the period that petitioner owned the auto
shop. None of the checkbook deposit entries was marked as to its
source. Petitioner offered no other financial records of the
auto shop, such as customer invoices or receipts, or account
statements, to correlate with these deposit notations. Although
petitioner says he used 20 to 30 credit cards to reimburse the
auto shop, petitioner offered no credit card receipts or
statements. He did not establish that the auto shop had paid the
expenses initially.10 Nor did he offer any proof of the loans he
says he obtained to finance his project.
Petitioner testified that he paid for the J car by what he
called "credit card loans" and other loans. He testified he used
10 A small number of the checks could have been payments
for auto parts, based on the notation on the stubs, where
present, or by the name of the payee. However, even those stubs
with notations do not specify that the parts were for
petitioner's J car.
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