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(6th Cir. 1994), affg. 99 T.C. 370 (1992) and T.C. Memo. 1992-
616.
We found Badell’s testimony to be unconvincing and
inconsistent with more convincing evidence in the record. First,
Badell’s testimony was implausible and incredible. He claimed to
not know what roofing services Kelso had performed at his
residence and at the B&W office, despite the fact that he
testified that he did not pay Kelso until the roofing job at his
residence was completed to his satisfaction. Badell’s testimony
that he did not socialize with Blume is contradicted by Blume’s
testimony that they did occasionally socialize and that they
sometimes drove to football games together.
Second, Kelso treated the transaction as a barter. It
billed B&W $49,000 for the roof construction on the Badell
residence in 1994, credited its accounts payable to B&W by
$49,000, and reported $49,000 as income on its 1994 return even
though B&W made no cash payment to Kelso that year. Third,
although B&W billed Kelso $43,998.86 on October 31, 1996, and
Kelso billed B&W $53,668 on December 31, 1995, neither Kelso nor
B&W tried to collect those amounts until after the revenue agent
began the audit. Fourth, the parties did not pay each other in
full until several years after providing the roofing job and
legal services. B&W paid Kelso in Kelso’s fiscal years 1998 and
1999, and Kelso paid B&W in B&W’s fiscal years 1997, 1998, and
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