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studios, an aircraft part deteriorated over time, which varied
depending on the particular aircraft part and its treatment by
the movie studios during rental.
During the years at issue, petitioner stored many of the
aircraft parts that he acquired outdoors on land that he owned in
the desert (desert property). Exposure to the weather also
caused some of those parts to deteriorate and become useless to
Aviation’s business activities. Mr. Thomson did not dispose of
any of those deteriorated aircraft parts. Instead, he retained
them, together with the aircraft parts that he was holding for
rental, on his desert property.
During the years at issue, Mr. Thomson did not maintain any
records showing (1) the specific aircraft parts rented by Avia-
tion to the movie studios, (2) when the aircraft parts were
returned by those movie studios, and (3) whether or not the
aircraft parts that were rented needed to be replaced or repaired
after those movie studios returned them to Aviation.
Petitioners filed Form 1040, U.S. Individual Income Tax
Return, for each of the years 1993 and 1994. Petitioners re-
ported certain income and claimed certain expenses from Avia-
tion's business activities in Schedule C of Form 1040 (Schedule
C) for each of those years.
OPINION
Petitioners bear the burden of proving that the determina-
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Last modified: May 25, 2011