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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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