Melvin J. Laney and Carolyn A. Laney - Page 24

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            settlement agreement [in Laney’s Court of Claims suit] forced by                          
            the United States on Petitioner to take a theft/casualty loss on                          
            their tax returns.”  At trial, Laney stated petitioners’                                  
            intention to have Henry testify.  On the third day of the trial                           
            Laney stated that Henry was to testify on the fifth day of the                            
            trial.  On the fourth day of the trial Laney again assured us                             
            that Henry was to appear and testify on the fifth day.  Henry did                         
            not testify on the fifth day.  As one of the first items of                               
            business on the sixth day, the Court noted the importance of                              
            Henry’s testimony on the negligence issue, as part of an effort                           
            to make sure that both sides understood the Court’s concerns                              
            about apparently missing pieces of the puzzle presented in the                            
            instant case.  The trial lasted 7 days.                                                   
                  In the final analysis, petitioners chose not to call Henry,                         
            and he did not testify.  We are entitled to, and we do, infer                             
            that if Henry had testified, then his testimony would have been                           
            unfavorable to petitioners on this issue.  O’Dwyer v.                                     
            Commissioner, 266 F.2d 575, 584 (4th Cir. 1959), affg. 28 T.C.                            
            698, 703 (1957); Stoumen v. Commissioner, 208 F.2d 903, 907 (3d                           
            Cir. 1953), affg. a Memorandum Opinion of this Court dated March                          
            13, 1953; Wichita Terminal Elevator Co. v. Commissioner, 6 T.C.                           
            1158, 1165 (1946), affd. 162 F.2d 513 (10th Cir. 1947).                                   
                  We observed Laney at the trial in the instant case.  On the                         
            basis of these observations and the evidence of record, it is                             

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