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Petitioner reported on his 1991 and 1992 tax returns that he
was entitled to deduct losses under section 1244 of $50,000 and
$47,350, respectively, on the theory that the Bank lent him the
$500,000, that he contributed the $500,000 to EPC's capital, and
that his contribution became worthless in 1988. Petitioner's
1991 and 1992 tax returns included a Form 8275, Disclosure
Statement, and an attachment thereto, that set forth the facts of
his theory as well as his position on the deductibility of the
amounts under section 1244. Petitioner's 1991 Form 8275 and
attachment thereto also revealed the facts concerning the
$31,000, $12,000, and $5,000 amounts at issue herein and his
position on the deductibility of these amounts, which he claimed
as business bad debt deductions on the 1991 return. Petitioner's
position on these latter amounts, as stated in his 1991 return,
is the same position that petitioner takes in the instant
proceeding.
Petitioner's Federal income tax returns report that he
earned personal service income for every year following and
including the year of the Loan. In 1991 and 1992, petitioner
worked as an employee of Elliott Drywall & Asbestos, Inc., and he
was paid compensation of $73,000 and $52,000 during the
respective years.
OPINION
Petitioner must prove that respondent's determinations set
forth in the notice of deficiency are incorrect. Rule 142(a);
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