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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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