- 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 NextLast modified: May 25, 2011