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This case epitomizes the ultimate task of a trier
of the facts--the distillation of truth from falsehood
which is the daily grist of judicial life. He must be
careful to avoid making the courtroom a haven for the
skillful liar or a quagmire in which the honest
litigant is swallowed up. Truth itself is never in
doubt, but it often has an elusive quality which makes
the search for it fraught with difficulty. That this
is so is clearly illustrated by the situation herein.
* * *
We decide whether a witness is credible on the basis of
objective facts, the reasonableness of the testimony, and the
demeanor of the witness. Quock Ting v. United States, 140 U.S.
417, 420-421 (1891); Wood v. Commissioner, 338 F.2d 602, 605 (9th
Cir. 1964), affg. 41 T.C. 593 (1964); Dozier v. Commissioner,
T.C. Memo. 2000-255.
From our observation of petitioners at trial, we found Dr.
Rinker’s testimony on this point to be credible, sufficiently
detailed, and reasonable. Dr. Rinker’s demeanor on the stand was
forthright and earnest. While petitioners at times lacked
detailed memories of some of their financial activities in 1999,
Dr. Rinker recalled her meeting with Mr. Hertz at her house in
2002 with relative precision. She testified that at the
conclusion of that meeting, she gave Mr. Hertz a box containing
the bulk of her source documents, and that she never saw them
again.
Mr. Hertz testified that he gave the box of records back to
Dr. Rinker at the conclusion of that meeting. According to Mr.
Hertz’s testimony, the entire purpose of the meeting was to
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