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control, the taxpayer may substantiate a deduction by reasonable
reconstruction of his expenditure or use. Sec. 1.274-5T(c)(5),
Temporary Income Tax Regs., 50 Fed. Reg. 46022 (Nov. 6, 1985).
In all other cases, unless the stringent substantiation
requirements are met for those categories of expenses covered by
section 274(d), "No deduction * * * shall be allowed". Sec.
274(d).
As noted in our findings of fact, petitioners provided no
documentary evidence to substantiate the claimed deductions.
Petitioner testified that he no longer had any of the receipts,
bank statements, or other documentation pertaining to the real
estate loan business he and a business associate operated during
1992 and 1993. Petitioner testified that his business records
(of a company no longer operating in 1992 and 1993) were seized
during a raid conducted by the FBI in July 1990. He further
testified that all of his business records from the initial
seizure in 1990 "and all the way through 1994 became the records
of the Federal Bureau of Investigation because of the ensuing
investigation". Petitioner testified that when the records were
returned by the FBI in 1995, he was still incarcerated and Mrs.
Braun "hauled them off to the dump" as she was "fed up with the
whole situation" that led to his arrest and conviction.4
4 If, as petitioner contends, Mrs. Braun discarded the
records for 1992 and 1993, she has failed to comply with her
(continued...)
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