Nariman Teymourian - Page 9

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          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            
               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.                               

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