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substantiating the amount and purpose of the item claimed. Sec.
1.6001-1(a), Income Tax Regs.
Petitioners did not have books and records to support their
deduction of these expenses. Petitioners have not proven that
they paid the expenses or that the expenses were made for a
business purpose. Interest expenses make up $108,576 of the
$127,985 claimed for 1988 (84 percent) and $96,693 of the
$135,824 claimed for 1989 (71 percent), yet petitioners provided
no evidence that they had any indebtedness relating to the dirt
fill operation.
Kane obtained the amounts to report as income and deductions
from the dirt fill operation from the trustee's listing of cash
receipts and disbursements; however, those records are not in
evidence. Petitioners produced no bills or checks to
substantiate the claimed expenses.
Petitioners offered no credible evidence to substantiate
their claimed expenses from the dirt fill operation for 1988 and
1989. Thus, we sustain respondent's disallowance of these
expenses.
C. Capital Gains From Sales of Stock in Bohannon, S.A.
Petitioners claimed that their basis in the Bohannon, S.A.
stock they sold in 1988 was $30,000, and $30,000 for the stock
they sold in 1989. Respondent disallowed petitioners' claimed
bases in their Bohannon, S.A. stock because petitioners did not
substantiate these amounts.
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