Richard John Kadunc - Page 5

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            subtracted from that amount $1,295.50 of "prepaid interest" and,                          
            thereby, exhibited a net figure of $15,600.83 in 1991 interest                            
            payments made by petitioner during 1991.  The following statement                         
            was printed in bold type at the bottom of the Form 1098, "1991                            
            Net Interest Payments Reported to IRS ********** 15,600.83".                              
            This statement is not ambiguous.  Petitioner failed to show that,                         
            during 1991, he made any deductible payments of home mortgage                             
            interest in excess of $15,6003 and, therefore, failed to prove                            
            that he (as a cash basis taxpayer) is entitled to a deduction for                         
            mortgage interest in excess of the amount shown on the Form 1098;                         

            3     Respondent introduced into evidence copies of petitioner's                          
            Forms 1098 from Gulf States for both 1991 and 1992.  The Form                             
            1098 for 1992 reflects "Net Prepaid Interest - Prior Year" in the                         
            amount of $1,295.50, which was included in the "Net Interest                              
            Payments Reported to IRS" for 1992; i.e., the amount that was                             
            deductible for 1992.  The Form 1098 for 1991 reflects "Net                                
            Prepaid Interest - Current Year" in the amount of $1,295.50,                              
            which was deducted from the "Net Interest Payments Reported to                            
            IRS" for 1991 (i.e., not deductible).  The Court concludes from                           
            these two forms that the $1,295.50 figure represents interest                             
            applicable to the 1992 year that petitioner "prepaid" during the                          
            1991 tax year.  Sec. 461(g) provides that, if a cash method                               
            taxpayer pays interest that is "properly allocable to any period                          
            * * * which is after the close of the taxable year in which                               
            paid", such interest shall be treated as paid in the period to                            
            which such interest is allocable.  Sec. 461(g)(2) provides an                             
            exception to this treatment for the payment of "points" in                                
            connection with the taxpayer's principal residence.  However,                             
            petitioner presented no evidence to show that he had paid                                 
            "points" that would entitle him to an interest deduction in the                           
            year of payment.                                                                          

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