Dan S. and Nancy J. Mitchell - Page 7

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          petitioners’ personal tax returns and whether petitioners could             
          change their method of accounting without permission.                       
               Mr. Mitchell testified at trial.  Mrs. Mitchell failed to              
          appear, and no witnesses corroborated Mr. Mitchell’s assertions             
          concerning his alleged farm activity.  Although a few receipts              
          were produced, the purpose of the expenditures is not apparent              
          from the face of the receipts and was not specifically or                   
          adequately explained by Mr. Mitchell.  His testimony consisted              
          almost exclusively of attacking respondent’s agents and arguing             
          that he was engaged in farm activity.  Mr. Mitchell stated that             
          “we feel that the fact that we live there, that we care for the             
          farm every day is substantiation enough.”  His uncorroborated               
          testimony was vague and conclusory and, particularly in view of             
          the belatedness of the claims, is not persuasive.                           
               Petitioners have not proven that they have any depreciable             
          basis in any equipment.  Respondent suspects that petitioners are           
          now claiming depreciation deductions on the same equipment for              
          which lease payments were previously deducted.  The only                    
          references in the record pertaining to business equipment relate            
          to lease/purchase agreements, and respondent’s suspicion that               
          petitioners have already deducted the lease payments on the same            
          equipment is not, as petitioners’ contend, “a ludicrous                     
          statement”.  Although Mr. Mitchell denies that the equipment                
          depreciated is the same as that for which deductions were already           
          taken, he has not presented any evidence substantiating either              




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