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supervisory work. Petitioner said that he was primarily an
investor in Bob Wade Ford and that he attended board meetings.
His testimony that he worked 400-500 hours each year at the
dealership was not credible.
We conclude that petitioner did not materially participate
in the management of Bob Wade Ford in 1988 and 1989. However,
under the phase-in provided by section 469(m)(2), he may deduct
$50,000 in 1988 (40 percent of his share of the dealership's loss
in 1988 ($125,000))4 and $52,692 in 1989 (20 percent of his share
of the dealership's loss in 1989 ($133,709) plus the section
1366(d)(2) carryover from 1988 ($129,752)).
B. Petitioners' Deductions From the Dirt Fill Operation
Petitioners reported losses of $127,985 for 1988 and
$135,824 for 1989 from a dirt fill business conducted on property
owned by the Dennis Horton Trust 101. Petitioners contend that
they offered credible evidence to support their claimed losses
and that respondent offered no contrary testimony or evidence.
We disagree. A taxpayer must keep records that are
sufficient to enable the Commissioner to determine his or her
correct tax liability. See sec. 6001; sec. 1.6001-1(a), Income
Tax Regs. A taxpayer who claims a deduction bears the burden of
4 As discussed at par. A-1, above, this amount takes into
account that petitioner's share of the dealership's loss for 1988
is limited to $125,000, the amount he contributed in 1988.
Petitioner's share of the dealership's loss in excess of that
amount ($129,752) is carried over to 1989. Sec. 1366(d)(2).
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