- 19 -19
Commissioner, 51 T.C. 494, 497-498 (1968); Rev. Rul. 65-254, 1965-2
C.B. 50.8
Petitioner made repayments of at least $11,942 in 1988,
$33,693 in 1989, and $19,029 in 1990. These amounts were reported
on Forms 1098 sent to the IRS and petitioners by Irvington Federal.
The forms indicate that they are interest payments made pursuant to
the line of credit set up by Mr. Ottey to recover the losses from
the check-kiting scheme. Mr. Ottey, however, testified that the
line of credit structure was only a bookkeeping mechanism to keep
track of both petitioner's restitution payments and Irvington
Federal's loss of interest income. Mr. Ottey claims that his loan
officer mistakenly sent out the Forms 1098, and that the bank did
not report interest income to itself from any of petitioners'
payments. Further, petitioner testified that he never agreed to a
7(...continued)
* * * * * * *
(c) Limitation on Losses of
Individuals.--In the case of an individual,
the deduction under subsection (a) shall be
limited to--
* * * * * * *
(2) losses incurred in any
transaction entered into for
profit, though not connected with a
trade or business * * *
8 A revenue ruling reflects the Commissioner's position
on an issue and is not binding on the Court. See Stark v.
Commissioner, 86 T.C. 243, 250-251 (1986).
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