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defend against respondent's determination in the notice of
deficiency that the unpaid balances in 1990 and 1991 were
misappropriations and income to petitioner. Respondent bears the
burden of proof. Rule 142(a).
The four security interests were not collateral for the
Activewear loans to Jackson and his corporations; they secured
petitioner's consolidated $80,000 personal loan, $65,000 of which
petitioner used to provide operating capital for Activewear.
Thus, petitioner used the loan proceeds primarily for Activewear.
Petitioner used about $27,000 of his marketable securities and a
house with about $100,000 in equity as collateral for the
consolidated loan. This is more than enough collateral for the
$15,000 loan that petitioner used for inventory for his
convenience store that was part of the $80,000 consolidated loan.
Respondent points out that petitioner benefited from living
in the O'Key house for 1 year rent-free. That year was August
1993 to August 1994. The years in issue are 1990 and 1991.
Respondent has not shown how living in the house in 1993 and 1994
had value in the years in issue. Also, respondent did not prove
the value of the benefit petitioner received.
We conclude that respondent has not shown that petitioner
received any income from security interests in 1990 or 1991.
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