- 12 - substantiate any item” and “the taxpayer has maintained all records required under this title and has cooperated with reasonable requests by the Secretary for witnesses, information, documents, meetings, and interviews”. Sec. 7491(a)(2)(A) and (B). For reasons discussed in more detail below, petitioners failed to comply with the applicable substantiation requirements, and they have failed to maintain all required records with respect to their expenses in the Atherton project. Taxpayers are required to keep such permanent records as are sufficient to substantiate the amount and the purpose of any deductions. Sec. 6001; Higbee v. Commissioner, 116 T.C. 438, 440 (2001); Hradesky v. Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976); sec. 1.6001-1(a), Income Tax Regs. Petitioners have failed to substantiate the vast majority of the expenses that they rely upon to compute the 1992 NOL. 1. Land Purchase and Related Expenses Petitioners claim that they paid a total of $2,017,397.50 to purchase the land used for the Atherton project, consisting of the following: Item Amount Land loan $1,460,000.00 Deposit from Assaad savings 422,397.50 Deposit paid outside escrow 200,000.00 Advance by Trudell & Coghan (200,000.00) Credit for amount paid before escrow141,125.08 Interest portion of this Credit 1(6,125.08)Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011