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to costs incurred in buying or selling the properties, or in
foreclosure expenses.
Petitioners’ 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.
4. Petitioners Failed To Call Key Witnesses
We note that neither Grant Hornbeak (petitioners’ partner in
the real estate transactions) nor anyone from Gendron & Co.
(petitioner’s accountant and preparer of the 1994 through 1999
tax returns) was called as witnesses. We infer that their
testimony would not have been favorable to petitioners. Wichita
Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946),
affd. 162 F.2d 513 (10th Cir. 1947).
5. The Court Will Not Estimate Petitioners’
Claimed NOLs
Despite the above mentioned discussion, petitioners argue
that they have substantiated their claimed net operating losses
for taxable years 1994 through 1999, based upon their alleged
bases in the properties and losses from the foreclosures.
Petitioners derived these numbers from property records gathered
by Revenue Agent Grennan during the audit. Petitioners argue
that at the time of foreclosure, they had bases and losses in the
properties as follows:
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