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After concessions, the only issue remaining for decision is
whether petitioners are entitled to a bad debt deduction for 1990
in the amount of $30,500.
Some of the facts have been stipulated, and the stipulated
facts are incorporated herein by this reference. At the time the
petition was filed, petitioners resided in Kirkland, Washington.
Richard Soo Kim (petitioner) owned a business that operated
as a subcontractor for various garment manufacturers.
Petitioner's employees would sew and press the garments before
they were packed and returned to the manufacturers.
Petitioner contends that garments in his possession, which
belonged to certain manufacturers, were stolen by one of his
employees. In order to repay the manufacturers for the missing
garments, petitioner reduced the amount of future invoices to the
manufacturers by the value of the garments. Petitioner deducted
the amount of the invoice reductions on Schedule C, Profit or
Loss From Business, attached to petitioners' 1990 Form 1040,
U.S.,Individual Income Tax Return. Petitioners' apparent
position is that, because subsequent invoices were reduced, the
business did not receive certain income from services the
business performed for the manufacturers. This reduction,
petitioners allege, is a business bad debt.
Petitioners bear the burden of proving that they are
entitled to any claimed deduction. Rule 142(a); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992). This includes
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