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depreciation than were claimed on the returns, apparently
reducing the claimed depreciable basis by certain items that
petitioners now concede were never moved from Fyffe.
Petitioners have introduced no books or records to
substantiate or explain their claimed depreciable basis, even
though petitioner testified that he kept books and records which
he supplied to his accountant.8 We draw an adverse inference
from petitioners’ failure to introduce such evidence that is
within their possession. Cf. Citron v. Commissioner, 97 T.C.
200, 217-218 (1991); Wichita Terminal Elevator Co. v.
7(...continued)
repossessed the equipment--petitioners reported opening basis of
$79,448, an increase in basis of $50,000, and their amount at
risk as $129,448. For taxable year 1991–-after petitioners no
longer possessed the equipment–-petitioners reported their
adjusted basis in the equipment and their amount at risk as
$31,942.
8 For at least some of the years in issue, petitioners
appear to compute their depreciable basis by reference to the
provision in the September 1988 bill of sale, which purported to
limit petitioner’s liability to Venco for assumption of the debt
outstanding on the property to no more than $165,000. This
$165,000 liability limit, however, approximates petitioner’s
personal liability as previously agreed to under the settlement
agreement with petitioners’ and Pacer’s various creditors. We
question whether petitioner assumed any such liabilities pursuant
to his purchase of the equipment from Venco and consequently
whether such liabilities are appropriately included in
petitioner’s depreciable basis in the equipment. Furthermore, we
question the bona fides of the various purported transfers of the
manufacturing equipment from Pacer to Venco and then to
petitioner. The record does not explain why Venco, having
purportedly purchased the equipment from Pacer in July 1988 for
$598,500, would then sell the equipment back to petitioner in
September 1988 for $10 stated consideration, with the parties
agreeing that petitioner’s liabilities would not exceed $165,000.
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