James K. Wise and Claudia R. Wise - Page 9

                                        - 9 -                                         
               Miscellaneous Deduction--$1,545                                        
               Petitioners assert that petitioner made a $1,000 payment on            
          a $20,000 debt owed to Texas Commerce Bank.  Petitioners assert             
          that the debt was part of the liabilities transferred from Wise             
          Co. and assumed by AMROC.  Respondent argues that the loan is not           
          deductible on a number of grounds, including that the payment was           
          not substantiated, the debt was not business related, and                   
          petitioners merely paid their own debt.                                     
               As a general rule, taxpayers bear the burden of proving the            
          Commissioner is incorrect in her determinations.  Rule 142(a);              
          Welch v. Helvering, 290 U.S. 111 (1933).  Furthermore, deductions           
          are strictly a matter of legislative grace, and taxpayers bear              
          the burden of proving their entitlement to any deduction claimed.           
          INDOPCO, Inc. v. Commissioner, 503 U.S. 79 (1992); New Colonial             
          Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).  This includes              
          the burden of substantiation.  Hradesky v. Commissioner, 65 T.C.            
          87, 90 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976).               
          Moreover, an obligor's repayment of loan proceeds generally                 
          cannot be deducted as a bad debt.  Dreyfuss v. Commissioner, 140            
          F.2d 922 (5th Cir. 1944), affg. a Memorandum Opinion of this                
          Court; Perry v. Commissioner, 92 T.C. 470, 479 (1989), affd. 912            
          F.2d 1466 (5th Cir. 1990); Estate of Schwehm v. Commissioner, 17            
          T.C. 1435 (1952).                                                           








Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011