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23. Great has not shown that it did not realize income from
forgiveness of indebtedness due to the cancellation of
promissory notes due to Tipuani.
24. Great has not shown that it is entitled to the $812 of
aircraft and pilot fees disallowed by respondent for the FYE
July 31, 1983.
25. Petitioners failed to keep adequate records of their
deduction items.
OPINION
Regarding those items on which the parties could not settle,
the trial of this case covered 5 taxable years of the two
corporate petitioners. Numerous deduction items were in
controversy, and we have reviewed the record with respect to
each of them and made specific and ultimate findings for each.
In this portion of the opinion, we express the standards under
which petitioners' controverted items were judged, and we
analyze and make additional ultimate findings regarding the
additions to tax with respect to both petitioners.
Petitioners bear the burden of proving that they are entitled
to the deductions claimed, or of showing that respondent erred
in the determination. Rule 142(a); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). In addition, petitioners
are required to maintain adequate records to substantiate their
claimed deductions. Sec. 6001. Petitioners were closely held
corporations owned and operated by the Johnsons. The
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