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for 1994. In the parties' settlement, respondent conceded the
1992 and 1993 Schedule E loss deductions but disallowed a
deduction for the 1994 Schedule E loss.
Although Mr. Fried agreed to accept the 1992 and 1993 tax
returns for the O'Bryon Co. for the purpose of establishing
Phillip's basis, we hardly think those returns, by themselves,
were sufficient for that purpose. A reasonable person would
doubt the credibility of the tax returns supplied, considering
that Phillip, as its sole shareholder, used the O'Bryon Co. as a
vehicle to engage in fraudulent activities.
In addition, petitioners failed to provide any evidence
establishing Phillip's 1994 basis in the company. Petitioners
contend that they produced documentation establishing the 1994
basis on March 16, 2000, but that a failure in communication
between respondent's Appeals officer and counsel resulted in
petitioners' reluctant concession of the Schedule E deductions
for that year. Petitioners' argument is unpersuasive, especially
in light of the tardiness of the alleged production.
No evidence was produced to support the particular items
claimed on the corporation's return or to show how Phillip's
basis in the corporation was calculated. Whenever there is a
factual determination with respect to a tax return, respondent is
not obliged to concede the case until the necessary documentation
is received to prove the taxpayer's contentions and claims. See
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