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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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