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venture existed between petitioner and Dogwood Acres, Harris or
Saudi Corp. Respondent contends that petitioner has not shown
that Dogwood Acres (and not petitioner) should be taxed on
$175,000 of the $250,000 commission from the Holiday Isle
transaction.
Petitioner bears the burden of proving that respondent's
determinations are incorrect. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). Transactions between related taxpayers
and between a closely held corporation and its shareholders are
subject to close scrutiny. United States v. Ragen, 314 U.S. 513
(1942); Jaques v. Commissioner, 935 F.2d 104, 106 (6th Cir.
1991), affg. T.C. Memo. 1989-673; Tulia Feedlot, Inc. v. United
States, 513 F.2d 800, 805 (5th Cir. 1975); Southeastern Canteen
Co. v. Commissioner, 410 F.2d 615, 619 (6th Cir. 1969), affg. in
part and revg. in part T.C. Memo. 1967-183.
B. Whether $175,000 of the $250,000 Holiday Isle Commission Was
Income to Petitioner
1. Petitioner's Affidavit
The only evidence that petitioner had a joint venture with
Dogwood Acres is an affidavit by petitioner. Petitioner did not
testify. The parties stipulated that the statements in the
affidavit would have been petitioner's testimony if he had
testified at trial. In the affidavit, petitioner stated that the
Holiday Isle transaction was a joint venture among himself,
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