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tax return. The partnership agreement specifically provides that
“The Partnership shall have a non-reimbursement policy when
expenses are incurred outside the partnership.” There is no
partnership provision requiring petitioner as a partner to pay
partnership expenses from his own funds.
Petitioner contends that he and his partner had a verbal
agreement that petitioner would not seek reimbursement from the
partnership for expenses he paid. Petitioner offered no
evidence, other than his own oral testimony, that such an
agreement existed or that he was required under such agreement to
pay partnership expenses from his own funds. It is well
established that this Court is not bound to accept a taxpayer’s
self-serving, unverified, and undocumented testimony. Shea v.
Commissioner, 112 T.C. 183, 189 (1999); Tokarski v. Commissioner,
87 T.C. 74, 77 (1986). Whether or not petitioner ever made any
alleged unreimbursed payments, petitioner was not required by the
partnership agreement to make such payments, nor did petitioner
prove there was a level of routine partnership practice
tantamount to an agreement to do so.
On this record, we conclude that petitioner is not entitled
to deduct the unreimbursed partnership expenses in issue on his
individual income tax return.
We next consider whether petitioner is liable for the
accuracy-related penalty under section 6662(a). Respondent has
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Last modified: May 25, 2011