National Industrial Investors, Inc. - Page 14

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            depreciable basis in the Burke property and the underlying                                 
            transactions, and that the facts surrounding NII's acquisition of                          
            the property in connection with the formation of NII were                                  
            extremely murky.  Respondent reasonably argued that the old books                          
            and records relied upon by petitioner were insufficient to prove                           
            the basis of the Burke property, since they were often unreliable                          
            and incomplete.  Cf. Southern Pac. Transp. Co. v. Commissioner,                            
            75 T.C. 497, 830-832 (1980) (holding that the taxpayer's                                   
            accounting records, standing alone, could not establish the cost                           
            basis of its assets).                                                                      
                  The record was almost devoid of evidence of Senter                                   
            Associate's basis in the Burke property.  Moreover, the                                    
            incorporation arrangement was unusual in that the only evidence                            
            that Charles Byrne held an interest in Senter was his testimony                            
            that he had loaned one of the partners money to invest in Senter,                          
            with the understanding that half of that interest would later be                           
            transferred to him.  A reasonable person could conclude such                               
            testimony lacked credibility and that the exact nature of the                              
            alleged sale of the Burke property to Senter and Senter's basis                            
            in the property required the Court's determination.                                        
                  In Smith v. United States, 850 F.2d 242, 246 (5th Cir.                               
            1988), the Court observed: "The more difficult it is to appraise                           
            a building * * * the more leeway we must give the IRS before                               






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