Barry L. Morris - Page 4

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          the rest of the accounting records that he was relying on and to            
          provide them to respondent.                                                 
               Because petitioner’s records were discovered, during trial,            
          to be fraught with errors, the Court concluded that respondent              
          was prejudiced by petitioner’s violation of the pretrial order.             
          The Court therefore sustained respondent’s objection to the                 
          admission of those documents into evidence.  However, the record            
          was held open until July, 9, 2007, to offer petitioner an                   
          opportunity to confer with respondent in order to reach an                  
          agreement concerning the filing of additional documents.  Such              
          documents could have included corrected versions of the documents           
          that were not admitted into evidence at trial and additional                
          supplemental stipulations of the parties.  Petitioner failed to             
          confer with respondent and then inexplicably failed to file a               
          brief or a reply brief.  In the end, although provided ample                
          opportunity, petitioner has done little to help himself prevail             
          on the remaining issues.                                                    
          I. General Deduction Rules                                                  
               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.                                               

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