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Respondent argues that in 1988 the $103,000 was properly
treated as a bona fide loan from Dean Witter to petitioner and
that the $37,767 bonus received by petitioner in 1991 was
properly included in petitioner's taxable income in 1991.
The evidence indicates that the $103,000 that petitioner
received from Dean Witter in 1988 constituted a loan, not
compensation for services to be rendered. There existed a good-
faith agreement between Dean Witter and petitioner that the
$103,000 petitioner received from Dean Witter in 1988 would be
repaid.
The evidence further indicates that the $37,767 bonus
petitioner received in 1991 from Dean Witter constitutes taxable
income to petitioner for services rendered by petitioner to Dean
Witter. Dean Witter properly included the $37,767 bonus as wages
on petitioner's 1991 Form W-2, and petitioner properly treated
the $37,767 bonus he received in 1991 as taxable income on his
1991 Federal income tax return.
1991 -- Claimed Investment Interest Expense
Section 163 allows taxpayers a deduction for the payment of
interest on indebtedness allocable to property held for
investment. Sec. 163(a), (d)(1), (3)(A).
Petitioner argues in the alternative to the above argument
that the $3,433 interest payment he made to Dean Witter with
respect to the $103,000 loan constitutes a deductible investment
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