Charles R. Harp and April B. Harp - Page 33

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                    petitioners' accounts were made during the years at issue.21                                                                                           
                    However, petitioners did not attempt to introduce those documents                                                                                      
                    into evidence.  Nor did they proffer as a witness their accoun-                                                                                        
                    tant, Mr. Bernard, who purportedly assisted petitioners with the                                                                                       
                    preparation of those schedules.                                                                                                                        
                              On the record before us, we find that during 1989 and 1990                                                                                   
                    petitioners made payments to, or on behalf of, K & H in the                                                                                            
                    amounts of $481,051.62 and $56,155.40, respectively.  We further                                                                                       
                    find on that record that the aggregate amount of deposits into                                                                                         
                    petitioners' accounts during 1989 and 1990 of K & H's and Ms.                                                                                          
                    Velilla's funds exceeded the payments that petitioners made to,                                                                                        
                    or on behalf of, K & H and Ms. Velilla during each of those years                                                                                      
                    by $90,666.35 and $60,168.06, respectively.                                                                                                            
                              With respect to the second dispute between the parties as to                                                                                 
                    whether the deposits that were not returned are includible in                                                                                          


                    21  Petitioners claim that certain other records and books, which                                                                                      
                    related to petitioner's sole proprietorship and petitioners'                                                                                           
                    other financial activities during the years at issue and which                                                                                         
                    would have assisted them in preparing petitioners' schedules of                                                                                        
                    expenses and petitioners' schedules of deposits, were acciden-                                                                                         
                    tally discarded during 1991 and that they had difficulty in                                                                                            
                    obtaining certain bank records from Washington Federal that would                                                                                      
                    have assisted them in preparing those schedules.  Assuming                                                                                             
                    arguendo that petitioners' books and records were, in fact,                                                                                            
                    accidentally discarded and that they had difficulty in obtaining                                                                                       
                    certain records from Washington Federal, petitioners would still                                                                                       
                    have to satisfy their burden of proof.  See Malinowski v. Commis-                                                                                      
                    sioner, 71 T.C. 1120, 1125 (1979).  Under such circumstances,                                                                                          
                    petitioners would be able to meet that burden by presenting                                                                                            
                    reliable secondary evidence.  Id.  As stated above, we did not                                                                                         
                    find petitioners' schedules of expenses or Ms. Harp's testimony                                                                                        
                    regarding those schedules to be reliable.                                                                                                              




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