- 24 - against petitioners as we must.18 Petitioners have not shown a reasonable basis for concluding that any amount of the $320,000 loan, the $250,000 loan, and the $350,000 loan represents deductible expenses. With respect to the Pacific construction loan and the First National loans, we are not convinced that the full amounts of those loans were paid into the project and are deductible. Given the circumstances of this case and the inexactitude apparent from petitioners’ evidence, we have no reasonable evidentiary basis to make an approximation as to the amount of the deductible expenses which were paid from those loans. We cannot, as petitioners would have us do, conclude that the entire amounts of the construction loans were paid into the Atherton project. We could choose a raw percentage, perhaps as high as 80 or 90 percent, and apply that percentage to the total amount of the loans. However, our choice of a percentage would be mere guesswork with no reasonable evidentiary basis. 5. Interest Expense The parties stipulated that “During respondent’s audit of the 1992-generated net operating loss carryover deduction claimed 18Petitioners’ situation in this case is a result of their own inexactitude and failure to maintain records of their expenses. Further, we find petitioners’ efforts before trial to locate any records that might be in the hands of third parties especially lax. Moreover, Mr. Assaad’s testimony at trial was confusing, and he repeatedly could not remember seemingly important facts. His testimony did not help to substantiate his expenses, and he did not provide any rational basis from which to estimate those expenses.Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Next
Last modified: May 25, 2011