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of the property to a trade or business or profit-motivated use.
See McBride v. Commissioner, 50 T.C. 1, 7 (1968); Leslie v.
Commissioner, 6 T.C. 488, 493 (1946).
Petitioner's coin and stamp business was not conducted on the
Jensen Road property, nor was the property used in connection with
that business. Moreover, petitioner did not terminate his personal
use of the property before or after obtaining the loan. Petitioner
and Ms. Head resided in the Jensen Road house for more than 2 years
prior to obtaining the loan. They continued residing there during
the operation of petitioner's business, and even after petitioner's
business failed. Further, the proceeds from the bank loans were
not used strictly for business purposes; a portion of the proceeds
was used for personal expenditures.
To conclude, the Jensen Road property was neither an
investment nor business property at any time after October 1980.
Accordingly, petitioner's 1986 foreclosure loss was personal and is
not deductible under section 165(c).
Issue 2. Dependency Exemption
The second issue for consideration is whether petitioner is
entitled to a dependency exemption for Ms. Ratliff in 1986.
Petitioner has the burden of proving that he is entitled to the
exemption claimed. Rule 142(a); Welch v. Helvering, supra.
Section 151(c) provides an exemption for each of a taxpayer's
dependents. Among other things, a taxpayer must provide over half
the support of any dependent during the calendar year in order to
claim the exemption. Sec. 152(a).
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