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payments from the insurance policy. Petitioner deducted the
amounts of the premiums paid as insurance expense.
During the taxable years 1991 and 1992, petitioner leased
automobiles through long-term contracts and reported the income
therefrom as rental income. Petitioner used the cash receipts
and disbursements method to report most of its rental activity.
However, for the years at issue as well as prior years,
petitioner used the accrual method to report its tax expenses
related to its automobile rental activity. The tax payments in
question were not made until the year following the taxable year
to which they would relate under an accrual accounting system.
Petitioner's accrued tax expenses for 1991 were $25,335.44 and
for 1992 were $34,305.96.
Discussion
Petitioner bears the burden of proving that respondent's
determinations are incorrect. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 114 (1933). This burden is not lessened in a fully
stipulated case. Borchers v. Commissioner, 95 T.C. 82, 91
(1990), affd. 943 F.2d 22 (8th Cir. 1991). We deal with the
issues in turn.
Related Entity Loss
Section 267(a)(1) provides:
No deduction shall be allowed in respect of any loss
from the sale or exchange of property, directly or
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