Donald L. Head - Page 6

                                        - 6 -                                         
          F.2d 583 (2d Cir. 1962); Doerries v. Commissioner, T.C. Memo. 1991-         
          396; sec. 1.262-1(b)(4), Income Tax Regs.  The burden of proving            
          that petitioner is entitled to deduct the loss rests with                   
          petitioner.  See Welch v. Helvering, 290 U.S. 111 (1933).                   
               While we accept petitioner's testimony that he originally              
          built the Jensen Road house for investment purposes, the investment         
          character  of  the  house  terminated  when  the  house  became             
          petitioner's personal residence in October 1980.  The house                 
          remained petitioner's and Ms. Head's residence for almost 5 years,          
          and the house was used as Ms. Head's residence after petitioner             
          separated from her until foreclosure of the property took place in          
          May 1986.                                                                   
               Petitioner presented no evidence regarding the extent or               
          duration of his efforts to sell the Jensen Road property after the          
          house was used as his residence. We therefore conclude that the             
          Jensen Road property was held by petitioner for personal, and not           
          investment, purposes from October 1980 and at all relevant times            
               Petitioner asserts that because the Jensen Road property was           
          used to secure a business loan, it should be characterized (for tax         
          purposes) as business property.  Although petitioner may have used          
          the equity in the Jensen Road property to secure a loan for                 
          business purposes, that act in and of itself does not cause the             
          character of the property to change from a personal residence to            
          business property.  The personal use of the Jensen Road property            
          had to terminate in order to effectuate a change of the character           

Page:  Previous  1  2  3  4  5  6  7  8  9  10  Next

Last modified: May 25, 2011