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Mr. Garrett admits that collecting muscle cars was a
personal hobby prior to the sale in 1989 and that he has no
written documentation substantiating the claimed basis in the
cars sold. Mr. Garrett also admits that prior to 1989, FGI and
TTI issued checks to pay for the acquisition of the muscle cars.
One or two years prior to trial, Mr. Garrett prepared from memory
a reconstructed summary of expenses associated with the muscle
cars sold in 1989. This reconstructed summary indicates purchase
and renovation expenses totaling approximately $683,000 on the 25
cars sold in 1989. Mr. Garrett claims that this figure does not
include any of the expenses improperly deducted by FGI, TTI, and
BEL during 1989 and that a portion of the disallowed expenses
should be added to this reconstructed figure to arrive at a total
basis of $800,000. Petitioners did not produce any evidence that
any corporate expenditures incurred during the years in issue
were related to the specific cars sold in 1989.
2. Activities After 1989 Sale
After the sale of the 25 muscle cars in 1989, Mr. Garrett
began purchasing and refurbishing additional cars to add to his
remaining collection of 10 cars. Other than the cars sold in
1989, Mr. Garrett did not sell any muscle cars during or after
the years in issue.4 Petitioners did not claim any depreciation
4Mr. Garrett made occasional trades to get a better example
of a particular car.
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