Phillip A. O'Bryon and Cyndie W. O'Bryon - Page 15

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          received and verified adequate substantiation for the items in              
          question.  See Simpson Fin. Servs., Inc. v. Commissioner, T.C.              
          Memo. 1996-317.  Respondent is given a reasonable period of time            
          in which to resolve a factual issue after receiving all relevant            
          information.  See Sokol v. Commissioner, 92 T.C. 760, 765-766               
          n.10 (1989).                                                                
               Respondent's position was that petitioners failed to report            
          income from Phillip's illegal Ponzi scheme.  That position was              
          based in fact.  Petitioners did not include the income on their             
          returns.  The adjustment to income was reduced not because                  
          Phillip received less money than the amounts determined by                  
          respondent, but solely because petitioners finally substantiated            
          the repayments made by Phillip during the years at issue.  Even             
          in the petition, petitioners failed to specify the amount of the            
          repayments made each year and merely asserted that Phillip                  
          believed the repayments equaled the amounts received.  It took              
          several requests from and meetings with Mr. Fried before all the            
          voluminous documentation required to substantiate the claimed               
          deductions was supplied to respondent.  This documentation was              
          not produced during the examination.                                        
               Petitioners did not supply evidence substantiating their               
          claim as to the alleged repayments until November 9, 1999, nearly           
          1 year after respondent filed the answer and over 9 months after            
          petitioners promised to provide such evidence.  See Harrison v.             

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