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We are not persuaded that an additional $40,000 debt to
Gilpin existed. We conclude, however, that petitioners did have
an interest obligation to Gilpin on the $80,000 debt and paid
interest in 1991. Petitioners are entitled to an interest
deduction of $29,320 in 1991 relating to property they owned at
519 Stanton Street. No other payments have been established to
be interest during that year.
Petitioners argue that at least six additional loans in
amounts ranging from $5,000 to $15,000 existed during the years
in issue. The only evidence of these loans is petitioners'
testimony at trial as to the amount and approximate date of each
alleged loan. Petitioner does not claim that any promissory
notes were issued, that any interest was charged, or that any
portion of any of the alleged loans has been repaid. Yoon and
Doo Sung testified that Korean custom dictates that no promissory
notes are executed to represent indebtedness because a friend's
word is enough of a promise to repay. Petitioners are required,
however, to establish by a preponderance of the evidence that the
loans existed. Yoon's uncorroborated testimony as to the
existence of additional loans is insufficient. See Wood v.
Commissioner, 338 F.2d 602, 605 (9th Cir. 1964), affg. 41 T.C.
593 (1964).
2. Asset Balances
a. Bank account balances. Petitioners contend that
respondent erred in failing to reduce yearend bank balances by
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