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Respondent also determined that they are liable for each of the
years at issue for the accuracy-related penalty under section
6662(a) on the underpayment for each of those years that is
attributable to, inter alia, that claimed Schedule A deduction
and that claimed rental loss.
OPINION
Petitioners bear the burden of proof on the issues pre-
sented. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115
(1933). Petitioners attempted to satisfy their burden of proof
through the testimony of Mr. Towles and certain documentary
evidence. Based on our observation of Mr. Towles' demeanor, we
did not find him credible. Moreover, Mr. Towles' testimony was
contradicted by the testimony of Mr. Alexander and Ms. Nichols,
two of respondent's witnesses, and certain documentary evidence.
We found each of those two witnesses to be credible and their
testimony to be consistent.3 We also found Mr. Schultz, respon-
dent's remaining witness, to be credible.
Petitioners contend that they are entitled to deduct under
section 212 the expenditures that the parties stipulated they
3On Mar. 8, 1999, petitioners filed a motion to strike the
testimony of Mr. Alexander on the ground that he perjured himself
at the trial in this case. We shall deny that motion. Even if
we were to exclude the testimony of Mr. Alexander, our findings
and conclusions herein would not change.
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