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received salary of $24,000 from L&L, but he reported only
$13,342.
Petitioners have failed to satisfy their burden of proof and
to establish that the amounts received from LIC and L&L were
loans. Respondent's determination of unreported income will be
sustained.
Interest and Schedule C Deductions
Petitioners bear the burden of proving that they are
entitled to any claimed deduction. Rule 142(a); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992). This burden includes
substantiating the amount of the item claimed. Hradesky v.
Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d
821 (5th Cir. 1976).
Petitioners offered no substantiation or explanation to
support the amounts of interest claimed but not allowed by
respondent for 1988. Petitioner testified that the 1988
Schedule C expenses were primarily related to maintaining his
automobile, but he did not explain how or if the use of the
vehicle was business-related. Petitioners did not maintain an
automobile log or provide any documents to substantiate the
Schedule C deductions. No additional deductions may be allowed
for 1988.
Petitioners claim that $23,597 of the $47,999 home mortgage
interest deduction claimed by them for 1989 was interest paid on
the property on Mt. Pleasant. Petitioner testified that he owned
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