- 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
thereafter.
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