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the same local jeweler but kept no receipts to document the
transactions.
During the years at issue, petitioner kept a calendar that
contained notations of his mileage, location, dates worked at the
gold mining activity, and some expenditures. He wrote “San
Andreas”, “cement plant”, or other notations on days he was
dredging or tending to his equipment. These calendars indicate
that petitioner worked approximately 39 days during 1994 and 37
days during 1995 either dredging for gold or working at home on
his gold dredging equipment. No calendar for 1996 was introduced
into evidence, nor was any testimony offered as to how much time
petitioner spent on his activity that year.
With respect to expenses incurred in the gold mining
activity, petitioner did not keep a general ledger or other
formal records. He kept some store receipts and canceled checks
for items purchased for the mining operation and had photographs
of his dredging and gold mining equipment. Other expenses and
items, such as mileage, were documented only by notations on
petitioner’s calendar or using receipts handwritten by petitioner
or acquaintances who had sold petitioner pieces of equipment. At
least some of these homemade receipts were not prepared
contemporaneously with the transactions. Rather, petitioner
admitted that he took inventory and gathered his receipts in 1997
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