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expenses, none of which were identified on the returns as related
to a boat, included depreciation, interest on a loan, slip
expenses, and expenses for maintenance and repair. Respondent
disallowed all of the disputed deductions determining that the
Centurion was an entertainment facility and that the claimed
expenses were nondeductible under sections 162 and 274. Neither
petitioner nor Roach maintained a contemporaneous guest log (log)
for the Centurion. During respondent’s audit of the subject
returns, Roach prepared a log for the Centurion, and he submitted
that log to the Internal Revenue Service in support of his claim
that petitioner used the Centurion entirely for business. The
log identified individuals who were purportedly on board the
Centurion during the subject years but who in fact were not. The
log also did not reference the Ensenada or Puerto Vallarta races.
During the discovery portion of this proceeding, Roach was
evasive as to whether any individuals fished or slept on board
the Centurion during the subject years.
Harold Jung (Jung) is a certified public accountant who for
approximately 2 decades has been the accountant for Roach’s many
business companies and the preparer of Roach’s individual income
tax returns. Jung prepared petitioner’s financial statements and
Federal income tax returns for the subject years. Roach told
Jung that Roach kept a log as to the Centurion and that
petitioner used the Centurion 100 percent for business. Jung
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