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When a taxpayer's records are lost or destroyed through
circumstances beyond his control, he is entitled to substantiate
deductions by reconstructing his expenditures through other
credible evidence. Malinowski v. Commissioner, 71 T.C. 1120,
1125 (1979). This Court is not bound to accept unverified,
undocumented testimony of a taxpayer. Hradesky v. Commissioner,
supra at 90.
The transaction records prepared by Mr. Tijerina's firm
listed most expenditures by category and check number, but
certain check numbers were repeated in different columns in the
transaction records for purported business expenses incurred by
petitioner at several different locations on different days. The
check numbers listed in the transaction reports did not match
check numbers listed in petitioners' bank records, which were
apparently from petitioners' personal account.
Additionally, amounts listed as expenses on petitioners'
1994 transaction record did not match petitioners' claimed
Schedule C expense deductions for the 1994 tax year. The
transaction record itself also miscategorized some of
petitioners' expenses for the 1994 tax year.
At trial, petitioner offered no testimony that petitioners
contacted utility companies, food suppliers, insurance offices,
or their former landlords for copies of receipts or other records
in an effort to substantiate deductions for the 1994 tax year.
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Last modified: May 25, 2011