Big Hong Ng - Page 21

          Commissioner, T.C. Memo. 1993-515.                                          
               Ms. Ng has the burden of proving her basis in an investment.           
          With the exception of the initial $36,750 stock purchase, she has           
          presented no evidence that would permit us to make such a                   
          determination.  Furthermore, prior to 1986, she claimed at least            
          $94,218 in accumulated losses which would result in a decrease in           
          her basis in the stock of (or loans to) Hong Kong Restaurant, Inc.          
          See secs. 1.1367-1(c)(2) and 1.1367-2(b)(1), Income Tax Regs.               
               The record reveals that Hong Kong Restaurant, Inc., purchased          
          its restaurant assets from Fong & Fong Co., Inc., in November of            
          1983 for $700,000.  Ms. Ng claims that she borrowed $500,000 to             
          permit the company to purchase the assets.  The record, however,            
          does not support this claim.  Rather, the record reveals that Ms.           
          Ng borrowed $500,000 from Wing Lung Bank on February 4, 1985, which         
          was 15 months after the purchase of the assets, and according to            
          bank records that $500,000 loan was to be used for the remodeling           
          of Ocean City Restaurant in San Francisco.                                  
               Ms. Ng's wholly owned corporation, Hong Kong Investments               
          Limited, obtained another $500,000 loan from Wing Lung Bank on              
          September 18, 1984.  However, we do not believe those funds were            
          loaned to Ms. Ng to invest in Hong Kong Restaurant, Inc., as she            
          contends.  Rather, we believe the proceeds of the additional                
          $500,000 loan were used to purchase the building that Hong Kong             
          Restaurant had been leasing from another party.                             
               Ms. Ng claims she further borrowed $100,000 from Hong Kong             

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