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292 U.S. 435 (1934). Taxpayers are required to maintain records
that are sufficient to enable the Commissioner to determine their
correct tax liability. See sec. 6001; Meneguzzo v. Commissioner,
43 T.C. at 831-832; sec. 1.6001-1(a), Income Tax Regs. Moreover,
a taxpayer who claims a deduction bears the burden of
substantiating the amount and purpose of the item claimed.
Hradesky v. Commissioner, 65 T.C. at 90; sec. 1.6001-1(a), Income
Tax Regs.
On the basis of the record in the instant case, we conclude
that petitioner has not established that the $30,000 payment to
Mr. Razon was bona fide debt. Although petitioner testified that
he made a loan to Mr. Razon, petitioner's subjective intent alone
is not conclusive of the issue of characterizing an advance as
debt or equity. In re Uneco, Inc., supra. Petitioners provided
no documentary evidence corroborating the payment as a loan.
Several considerations support our conclusion that
petitioner's payment to Mr. Razon was not a bona fide debt.
Petitioner testified that he and Mr. Razon did not execute a note
or establish a loan amortization schedule. The agreement
provides that "BEN D. RAZON * * * does hereby irrevocably assign,
transfer and set over to * * * [petitioner] a proportionate share
of his right, title and interest in the above referenced
Partnership". Additionally, pursuant to the agreement, the
parties agreed "to execute any and all documents necessary or
appropriate to transfer their interests hereby conveyed or to be
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