Robin A. and Susan D. Bettencourt - Page 8

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          know or were not sure what each check was for.  As to the                   
          remainder of the improvements, Mr. Bettencourt admitted at trial            
          that he was unable to ascertain the exact amounts spent by Mrs.             
          Hatch in renovating the residence.  He also was unable to                   
          establish the year each of the improvements was supposedly made.            
          The written evidence regarding the claimed improvements was vague           
          at best.  Mr. Bettencourt is a certified public accountant and              
          should have known that such improvements should have been                   
          documented if, as petitioners contend, the expenditures                     
          constituted capital expenditures made by Mrs. Hatch as a gift to            
          petitioners.  When asked why he did not maintain a log of the               
          improvements, Mr. Bettencourt only reasoned that he did not                 
          because they were “arm’s length” transactions between siblings,             
          and “they would write things down on a cash register tape, and it           
          would be hard for us to have a record”.  The Court is not                   
          satisfied with this explanation as it fails to address the                  
          principal issue as to whether the improvements constituted                  
          capital items, and whether they were intended as gifts to                   
          petitioners.  Petitioners have failed to establish that the                 
          expenses should be added to the residence’s adjusted basis.                 












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