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operating loss of $31,149.29 for 1987. They claim $13,277.71 as
a capital loss in 1987.
We disagree. Petitioners are not entitled to basis in
Americana for petitioner husband's deposit of $9,800 into its
account because petitioner husband did not prove that this was a
true investment of funds in Americana; instead, it was an
instance of petitioner husband's moving funds between accounts.
Petitioners did not offer any evidence showing that the $2,660
petitioner husband paid to the Mazzolas was interest. Also,
petitioners have not established the value of the assets they
received from Americana when it liquidated. Petitioners have not
proven the amount of their basis in Americana, or that they may
deduct the business interest or net operating loss in the amounts
claimed. Thus, petitioners may not deduct a capital or ordinary
loss upon Americana's liquidation.
6. Unreported Interest Income
Gross income means all income from whatever source derived,
including dividends and interest. Sec. 61(a).
Petitioners argue that respondent erred in attributing
interest income from Americana's bank account in 1987, 1988, and
1989, to petitioners. They contend that interest earned on
Americana's account went directly into the account and was not
used by petitioners. Petitioners argue that a withdrawal of
funds from a closely held corporation is a dividend to the
recipient-shareholder to the extent of the corporation's
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