James G. and Elaine A. Wanchek - Page 6




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          Cabber or Mr. Green whether Mr. Cabber was an architect.                    
          Regarding Mr. Green’s representations as to the “fine quality” of           
          his houses, respondent asserts that even petitioners have                   
          conceded such a term is subjective and that Mr. Green believes              
          that he provided the highest quality work.  When petitioners                
          discovered defects in their house, respondent observes that,                
          until Mr. Green moved to Las Vegas in 1998, and even after the 1-           
          year warranty period had expired, he sent repairmen to fix those            
          defects.  Respondent’s ultimate contention is that this is a                
          contractual dispute, not a criminal matter.  In that regard,                
          respondent notes that this dispute was the subject of a civil               
          suit, that the civil suit settled with no admission of fault, and           
          that no criminal complaint was ever filed in this matter.                   
          Finally, respondent addresses this Court’s decisions dealing with           
          similar situations and asserts that this case is like those in              
          which this Court has disallowed theft loss deductions.                      
          II.  Theft Loss                                                             
               Deductions are a matter of legislative grace, and the                  
          taxpayer must maintain adequate records to substantiate the                 
          amounts of any deductions or credits claimed.  Sec. 6001; INDOPCO           
          Inc. v. Commissioner, 503 U.S. 79, 84 (1992); sec. 1.6001-1(a),             
          Income Tax Regs.  As a general rule, the Commissioner’s                     
          determination of a taxpayer’s liability in the notice of                    
          deficiency is presumed correct, and the taxpayer bears the burden           







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