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were placed in a number of alleged trades involving options in
U.S. Treasury obligations. These trades were to function as
alleged "hedges" against losses in the gold trades.
In the present cases, the stipulation of settled issues
resolved all the issues before the Court except whether
petitioners are entitled to investment interest expense
deductions resulting from Peng Partners' participation in the FTI
A/C transactions. The investment interest expense deductions in
issue are as follows:
Year Amount
1977 $6,618
1978 29,957
1979 18,037
1980 17,771
Discussion
Respondent's determination that the claimed interest expense
deductions are not deductible is presumptively correct, and
petitioners bear the burden of proving that respondent's
determination is erroneous. Rule 142(a); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering, 290
U.S. 111, 115 (1933). The fact that these cases are fully
stipulated does not relieve petitioners of that burden. Borchers
v. Commissioner, 95 T.C. 82, 91 (1990), affd. 943 F.2d 22 (8th
Cir. 1991).
Section 163(a) generally permits the deduction of "all
interest paid or accrued within the taxable year on
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