- 16 - depreciation and interest expenses and the expenses of Sale by Owner and Far Western. (a) Respondent contended that petitioner did not establish that prior year losses were based on deductible business expenses under section 162, rather than on nondeductible personal expenses under section 262. Moreover, petitioner's own accountant could not vouch for the accuracy of NII's extant books and records, and virtually no other testimony concerned their accuracy. The fact that respondent prevailed on this issue at trial confirms that her position was substantially justified. (b) Interest expense deductions for several loans secured by the Burke property, including the San Francisco Loan, also formed part of the claimed net operating losses from years prior to 1989 and 1990. The property collateralized a $75,000 loan from a group of investors (Investor Group loan) from June 10, 1982, until October 29, 1985. On September 27, 1985, Owens Financial Group, Inc., lent petitioner $85,000 (Owens loan). Respondent conceded in her opening statement that petitioner was entitled to deduct the interest on the San Francisco Loan in 1989 and 1990 (see supra pp. 10-11), but did not concede the deductibility of the 1988 interest on that loan, which substantially contributed to petitioner's net operating loss for that year. Documents verifying the purpose of interestPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011