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Petitioner’s Respondent’s
Transaction Calculation Calculation
Facilities mortgage ($312,500) ($154,175)
May 1985 loan 270,000 94,500
October 1986 loan 350,000 350,000
Net amount owed to
petitioner 307,500 290,325
We disagree with both parties’ calculations in part because
they used improper amounts for the facilities mortgage and the
May 1985 loan. We disagree with petitioner’s calculation because
petitioner used the original face amounts of the loans. We
disagree with respondent’s calculation because respondent used
balances on March 31, 1989. The parties should have used the
balances on December 31, 1988.
We would conclude that petitioner might deduct as a bad debt
for 1988, the net amount of the balances on December 31, 1988, of
the facilities mortgage, May 1985 loan, and October 1986 loan if
the record included those amounts. However, it does not.
Petitioner has the burden of proof on this issue. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Thus, we limit
petitioner's deduction to $290,325.
C. Whether Petitioner Is Liable for the Addition to Tax
for Failure To File
Respondent determined that petitioner is liable for the
addition to tax under section 6651(a)(1) for not timely filing
his tax return. A taxpayer is not liable for this addition to
tax if he or she shows that the failure to file was due to
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