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Tahiti Property
With regard to petitioners' Tahiti Property, our
conclusions are just the opposite. Petitioners' Tahiti Property
has inherently associated with it extensive recreational and
personal aspects. Petitioners have not satisfied their burden
of proof that the Tahiti Property was held and managed by them
for anything other than personal reasons. Rule 142(a).
Petitioners did not maintain complete and adequate records
with regard to expenditures made on the Tahiti Property.
Petitioners’ assertion as to significant appreciation in the
value of the Tahiti Property is neither credible nor persuasive.
Petitioners claim that, as a result of their efforts and
improvements, by 1994, the fair market value of the Tahiti
Property increased to $3.7 million and that, after their
purchase costs of $989,000 and additional costs of $597,000, for
total alleged cash expenditures of $1,760,000, petitioners have
realized on paper an economic gain of $1,940,000 in connection
with the Tahiti Property.
No credible evidence supports either the amount or nature
of the claimed total expenses petitioners incurred on the Tahiti
Property, nor the fair market value of the Tahiti Property.
We conclude that, during the years in issue, petitioners'
ownership and management of the Tahiti Property constituted a
personal activity with respect to which petitioners' expenses
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