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when the properties were foreclosed upon. For example, in 1989,
petitioners reported adjusted gross income of zero. In 1990,
petitioners reported adjusted gross income of -$820,198.
Petitioners contend that losses from foreclosures on the five
properties created the net operating losses. Based on the
stipulated facts in this case, however, four of the properties
were foreclosed upon between 1982 and 1985, and the fifth
property was not foreclosed upon until 1992. This is one of the
many inconsistencies evident in petitioners’ case.
Petitioners have failed to offer credible testimony to meet
their burden of substantiation in this case.
3. Petitioners Provided No Financial Records
Petitioners failed to provide any financial documentation to
substantiate the net operating losses. Petitioners did not
produce books or records for the alleged loss years to
substantiate the claimed losses. Petitioners provided no
financial statements from the H & H partnership. Petitioner
conceded that he does not have any records for the properties or
the H & H partnership, as his partner Mr. Hornbeak retained all
the records. Petitioner failed to obtain these records from Mr.
Hornbeak. Petitioners provided no financial statements from H &
H Land Development Corp. Petitioners provided no receipts as to
losses on the property. Petitioners provided no information as
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