Floyd L. Garrett and Dorothy G. Garrett - Page 6

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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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