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actually paid cash for casual labor, we think that Ferrentino or
Brittain would have disclosed the payments during the audit
process instead of waiting until litigation commenced.
Petitioners did not introduce testimony of any purported
casual laborer. The rule is well established that the failure of
a party to introduce evidence within his possession and which, if
true, would be favorable to him, gives rise to the presumption
that, if produced, it would be unfavorable. Wichita Terminal
Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162
F.2d 513 (10th Cir. 1947). Donald Travis testified that his son
Doug was used as casual labor. Andrew Davis testified that he
hired his ex-brother-in-law as a casual laborer. We think that
petitioners could have called these people to testify, under
subpoena, if necessary, without undue hardship. Therefore, we
presume that these alleged casual laborers would have testified
unfavorably.
Petitioners' most strenuous effort to establish cash
payments for casual labor took the form of a report (Report)
authored by Brittain which attempted to illustrate the use by AJF
of cash payments in very large amounts for casual labor. If the
Report were to be believed, AJF expended cash for casual labor in
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