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drawn on Pieces of Eight’s account. The checks that respondent’s
agent could not determine were allowable business expenses were
considered to represent personal, nondeductible expenses of
petitioner and Ms. Murphy, one-half of the amount of which was
allocated to petitioner. Those expenditures were determined to
represent net income of Pieces of Eight.
In July 1991, a Florida court awarded Ms. Murphy sole use
and possession of Pieces of Eight and restrained petitioner from
coming on or about the business (July 1991 order). During 1992,
Ms. Murphy found hidden in petitioner’s files an agreement dated
September 3, 1990, in which petitioner, as transferee for a
company to be incorporated, purported to purchase the assets of
Pieces of Eight from Michael Van Heemst.
OPINION
Home Mortgage Interest Deduction
Respondent determined that petitioner and Ms. Murphy were
entitled to claim a deduction for home mortgage interest paid in
1987 in the amount of $16,582, rather than the $25,200 claimed on
the 1987 return, because the payment of interest in excess of the
amount allowed had not been established.
Deductions are strictly a matter of legislative grace, and a
taxpayer bears the burden of proving entitlement to any deduction
claimed. Rule 142(a); New Colonial Ice Co. v. Helvering, 292
U.S. 435, 440 (1934); Welch v. Helvering, 290 U.S. 111, 115
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