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petitioner for sale to customers in the ordinary course of
a trade or business. In that event, however, respondent
argues that "petitioners have failed to substantiate" their
payment of the annual dues. Petitioners bear the burden of
proving that each of them is entitled to the deduction.
Rule 142(a).
In the prior section of this opinion, we set forth our
basis for finding that Mr. Lemons held the subject club
memberships for sale in the ordinary course of a trade or
business. Thus, as recognized in respondent's post-trial
brief, petitioners are allowed to deduct under section
162(a) the amount of any annual dues "paid" to maintain
those club memberships. The question becomes whether
petitioners have proven that they paid any dues to the
club. They introduced no documentary evidence to
substantiate that payment. Mr. Dixon testified at trial
that the joint venture "loaned" the amount of the dues to
petitioner and himself and that neither of them repaid the
joint venture. Mr. Dixon's testimony on this issue is as
follows:
Q Did you pay any of those dues?
A I believe we did pay them.
Q You did pay them?
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