found in its rulings that the hit the facilities must be used for entertainment during the tax years in question or to fit within that initial now if you look at all the cases that we cite in our tax corporate bill showing that the passport made a specific finding the yacht and the r v in this case are listed property under the regs aren't they not are they not they are considered lissa property they are all those who know and ok so once they're listed property the taxpayer has to provide certain types of documentation that is prepared i think concurrently these you know needs to be contemporary documentation showing how of this was  portable if there was no finding that the facilities for use for entertainer recreation during the tax years question however there are obviously the loss of property in under two sections section two hundred and seventy four and its corresponding regulations it does indicate that  expense you need to have adequate records and other cooperate evidence usually for testimony or other docking terry type of evidence that's always usually you know and you know that's that was the basis for the for the ruling against your clients isn't that they please slow down and also wait joke sorry roger that but that was the basis for the ruling was it not that there was inadequate documentation so you so your your argument i would think would have to be no there's not a requirement for documentation or the documentation or your clients provided adequate documentation shirt sure the alternative well the st argument we made was because we think the ruling was based on the revenue reasons testimony where she had observed or allegedly observed arsenal items littered throughout the vehicles during her visit or if you look at the dock in syria evidence in the record that is that expressly contradicts her testimony you know but i think that now was the greatest hits because why do you think that was the basis of the facts or truly export truly in the argument made by the government consistently was listen you know and then the nd element with respect to that was the amount of each business use based on the appropriate measure and total use of the tax period the time and the business purpose for the expenditure of use now in our position all the disclosure statement promissory notes showing when it was purchased how much it was purchased for when it was placed in service and when it was contributed or carlos to their proper testimony now if you look at the the regulation spouses can cooperate  each other's statements on statement through their or even though they filed joint tax returns together so we feel that through the documents that were offered to the right of the trial and other cooperated evidence in their testimony that the that you listed would be a document that would not necessarily relate to the business purpose of the you know when you bought it when he does it would be expenses related to those items i mean you would do that even if it was your personal view security guards and was used as a sailboat's liberal office that mast had marina during the day and they were all of her use during the season so when you look at each element of that rock we feel that we need all of them with respect to the actual business purpose use of both vehicles used them for any entertainment purpose part of placing any service at the arena so we feel that these schedule seen its actions are permissible if we did meet the requirements under this particular regulation and that the business purposes evident from the surrounding fa circumstances given that they were in the business of selling books i mean they were operating a marina or offering recreational activities to their customers it is not beyond the realm of reason that these vehicles were used for business purposes at a marina during the years in question they were not in an unrelated feel they are not waters or doctors trying to supplement for subsidize their personal expenses here but the reason for the documentation requirement is you've got and how many tens of use and that requires documentation so you're going to have to go back and say we never used it or know when out of season was it never used for personal purposes there's a there's a strong administrative interest in requiring the taxpayer to provide the documentation for this type of property for listed property and you're saying we're telling the truth and we did use it for business each can be based on the rental activity from the property itself or to be based on the post conversion appreciation of value property and work of individual homes property for best me is that is basically effects of circumstances determination which is used in the term and the taxpayers and a time so we would feel that that factor is neutral because tech support cases are kind of all over the place as to what substantial in some cases they found six years to be insubstantial and in other cases they found six months to be substantial so we were certain because that factor you're protecting your you're protecting your right to insurance that it's not joe you've got to make money is there's no doubt in our mind that if the taxpayer and fail to keep insurance on the property the government would have pointed to that as well i think profit motive because they were interested conversion appreciation that was their primary intention throughout all of their testimony during recent run of the property was to take advantage to protect the investment and make sure they didn't have a casualty loss in some point if you through a tornado or some other activity that or was never argued by the tax court or excuse me by the government at the text or trial and the tests were never found that it would be difficult to calculate what the loss was and i think in my grief i put forward a calculation of what we believe order my name is paul a list from the department of justice appearing on behalf of the commissioner of internal revenue the tax court did not clearly error when it determined that the taxpayers were not entitled to their claimed deductions on the today an oral argument each of those items the yacht and the recreational vehicle are listed property under the terms of the regulations because they are listed property there is no room  for any type of for any type of adjustment as to what's required the stack and the regulations clearly require adequate documentation not only of the expenses that are associated with that property but with the business use of the property and i think the council's argument is mostly generated tore words having documentation of the expenses that were associated with the purchase the operation the maintenance of the yacht and the r v but what's lacking in this record as the tax court clearly found and a documentation of the business use of the yard and the r v and when we have these types of things that are listed property congress has made a decision that certain types of property are of such a type that they are so likely to be used for personal use that once a piece of property is identified as being listed property this for substantiation requirements come into play period and  does not meet all of the detailed requirements of the regulations but perhaps more importantly the tax court found none of that other corroborative evidence to be credible the tax court made a specific finding in its opinion based upon the record this case i think that this is where the testimony of the revenue agent comes into play counsel has argued that the tax court's finding that the tax payers test to money is not credible itself erroneous determination however the testimony by the revenue agent tends to support the tax court's finding that the tax payers testimony was not credible and the the revenue agency testimony that she identified personal items strewn throughout the yacht for example or her to or including things like a bathing suit food in the freezer other beverages personal grooming items in the bathroom all of that testimony tends to show that the that the property was used in some at some time at some point for some personal use and the reason why that supports the tax court's finding that the taxpayers testimony was not credible is because the taxpayers testified that the yacht was never used for any personal use period they didn't testify that i for personal use but that it was mostly used for business they testified that it was never used for any personal use and they'd states testified in the same manner with respect to the r v so the fact that there was evidence in the record of some personal use calls into question the taxpayers testimony that it was never used for personal use and so the taxpayer's credibility finding and of course this court is well aware current credibility findings are very difficult to challenge under normal circumstances in this case there is clear evidence on the record that supports the credibility determination and so once the tax court's finding of lack of credibility for the taxpayers testimony that renders the record devoid of any supporting documentation whatsoever with regard to the business use of the yacht and of the five t c two to see one and that one that regulation specifically speaks to the documentation that's required for a list property as art one hits as that hea generally an adequate record must be written however a record of the business use of listed property such as a computer automobile prepared in a computer memory device with the aid of a logging program will constitute an adequate record so for listed property the regulations go somewhat slightly further in terms of the type of documentation is required now also in response to the court's point made earlier during an argument that there is a burden involved in the service reviewing documents reviewing tax returns that have been filed when these types of deductions are claimed is specially with respect to this with respect to this type of property there is a regulation that speaks to that your honor and that is twenty six c f r one two hundred and seventy four dash five t d three and that the regulation is entitled business use of other listed property and that regulation requires that on tax returns that are filed after nine hundred and eighty four dollars when a taxpayer claims a deduction or credit with respect to any listed property other than  ecole and then in apparent that occur it gives examples of such other listed property one of which is a yacht the taxpayers are required to disclose on the tax return on the face of the tax return for item the date the property was placed in service the percentage of the business use whether evidence is available to support the percentage of business use and whether that evidence is written and so clearly the regulation contemplate just as your honor pointed out that it may be possible that listed property could be used sometimes for personal use and sometimes for business use and that with adequate documentation declared on the face of the tax return it could be sorted out what percentage is personal use what percentage is business use in this case its taxpayer says i need the space so much your time with the vehicles what the what about the house so your honor the government is in agreement that the tax court also correctly determined that the tax payers were not entitled to the claimed loss deduction with respect to  the th place property on the ground that they had not established they had not met their burden of establishing the property was converted from personal use to income producing use now the they were in the house for quite some time isn't that pretty good evidence that they're saving it for investment purposes your honor it could be but it could also support the tax court's finding that it was investment purposes i think it's important to note in this regard that when the taxpayers st moved out of the property in two thousand and five st they had already begun undertaking renovations to the property a few years before moving out they moved out in two thousand and five and when they did they did not move to a new permanent residence they moved to an apartment that they leased for at least three years and that that and the record indicates that when they leased lot of apartment they didn't even have enough room in the apartment for them to bring all of their personal belongings with them they were required to rent multiple different storage units around town  property upon completion of the renovations that they were undertaking they did not move to a new permanent residence when they when they when they undertook that that renovation they may have had the intention to return to the property and that's what the tax court said in its opinion the tax court said that the intention of the tax payers upon moving out in two thousand and five was not clear but it's their burden to show a clear intention that they intended for the property to be converted from personal use to income producing use the tax court found that they had not done that for two thousand and five and that that factual finding reviewed for clear error by the tax investment use in two thousand and five now on the tax returns that they filed prepared by their by their advisor miss perch they indicated that the conversion date was july st two thousand and eleven which was the date on which they rented the property as judge holmes pointed out at the non market rate of five hundred dollars per month so when they st initially file their tax returns they claimed that the date was january for july st two thousand and eleven that's that that's really the conversion take that they indicated for purposes of litigation are we focused on the two thousand but i understood that was the figure that was before the time scored one were operating honor that's correct for purposes of litigation the date that they indicated is two thousand and five however i believe that the fact that they initially when they file their tax returns claim to date of july two thousand and eleven and then later after disallowance they arrive at a date of of two thousand and five calls into question this is the intention of the taxpayers and is there something in the record  tax return simply as a result of that having been the date that it was converted to rental property now the reason why these states matter i think is as as a parent to the court is that if the if the if the property was converted in two thousand and five then the taxpayers may be and will airbases the the extent of renovations that were done from two thousand and five to two thousand eleven if the property was converted in two thousand and eleven then of course they make that they would not be entitled to include any of those things and so at the end of the day whether it's two thousand and seven or two thousand and five what i'm saying is that the tax payers at different times have put forth two different dates and that's another reason why there is insufficient evidence to establish which date is a conversion date if any the tax  that that it was the property was never converted to an investment used we feel that that that that finding by the tax or is supported by the record and again as the court pointed out the lack of evidence of federal market value at the your honor's again as stated in our briefs we believe that the reasonable cause defense does not apply by miss burch testified at trial quote she advised the taxpayers that they needed to know the fair market value in tax payers to claim the deduction even without substantiation even though she testified quote she understood this property to be listed property that isn't by him fourteen a page two thousand two hundred and fifteen and that eliminates any reasonable cause defense because when asserting a reasonable cause defense in reliance on a tax on a tax advisor the taxpayer must show that the advice of the qualified advisor took into account all facts and circumstances and was not based on reasonable factual or legal assumptions and