- 9 - However, petitioner credibly testified that, when Mr. Zargari was preparing the loan application, petitioner believed the loan application was asking for the “net rental value”, or the amount petitioner would have received had he rented out the property. In addition, petitioner credibly testified that his parents were living in the Los Angeles condominium, he did not charge his parents rent, and he did not receive any rent. Respondent argues that we do not have to accept petitioner’s self-serving testimony, citing Mendes v. Commissioner, 121 T.C. 308 (2003). In Mendes, the taxpayer was contesting a 10-percent additional tax on an early distribution from a qualified retirement plan imposed under section 72(t). Id. at 319-320. The taxpayer argued that a bank had previously withheld the 10- percent additional tax but offered no documentation to verify his testimony. Id. The Court held that it did not have to rely on the taxpayer’s self-serving testimony when he failed to present other evidence that the 10-percent additional tax was previously withheld. Unlike the taxpayer in Mendes, petitioner is asserting that he never received income. We recognize the inherent difficulty in proving a negative, and because we find petitioner’s testimony to be credible and his explanation of the loan application persuasive, we accept petitioner’s testimony.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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