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nonbusiness bad debt. Respondent further contends that the
additional expenses in dispute were not substantiated as to
amount or business purpose and that petitioners’ negligence in
reporting items on their returns and in understating their tax
liabilities supports the additions to tax and penalties
determined by respondent.
Petitioner contends that the advances from his insurance-
related entities were bona fide loans; that the fishing
activities were a charter business; and that the loan guaranty
was intended to protect petitioners’ salaries from Mayflower.
Petitioners presented neither evidence nor argument relating to
the remaining deductions or the additions to tax and penalties.
Thus, petitioners are deemed to have abandoned those issues. In
any event, deductions cannot be allowed in the absence of
evidence that shows the expenses were incurred and the purpose
for which they were incurred. The concessions by petitioners as
to mischaracterized and improper deductions support the additions
to tax and penalties in each year.
With respect to the other issues, petitioner testified at
trial. His testimony was not corroborated by any other witnesses
and was, to some extent, contradicted by the documentary
evidence. We need not accept uncontroverted testimony at face
value if it is improbable, unreasonable, or questionable, see,
e.g., Lovell & Hart, Inc. v. Commissioner, 456 F.2d 145, 148 (6th
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Last modified: May 25, 2011