Jay M. Anderson and Helen B. Anderson - Page 17

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            basis is the cost of constructing the J car.  Secs. 1011, 1012,                             
                  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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