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the records from California to New Jersey with the United
Parcel Service." In discussing the evidence adduced to
substantiate the payments to clients for professional
services and supplies, he also states that "his original
books and records were lost by United Parcel Service when
the records were shipped from California to New Jersey."
At trial, petitioner made no suggestion that any
records necessary to substantiate the returns and
allowances claimed on his return had been lost. To the
contrary, during his opening statement, petitioner
mentioned certain business records that allegedly had been
lost, but he limited that discussion to the substantiation
of certain business deductions that are no longer at issue
in this case. When it came to the returns and allowances
at issue here, petitioner made it clear that he never had
records of any of these expenditures. Petitioner stated as
follows:
In other areas, for example, we'll get to
the area of returns and allowances. In this
area, often the client had a problem with the IRS
or a government agency and I advanced taxes on
their behalf, without any expectation of getting
the money back from them, it--from them. And
unfortunately, at that time, I was perhaps lax
that I didn't have business contracts or even key
business records. There were just oral agree-
ments with respect to the treatment of these
items. Obviously, it's a practice of–-it's not
an ideal practice and it's not that these records
were lost. It's just that I didn't keep them at
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