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account at 10 to 12 percent interest. Second, Jeffrey also
testified that his wife was furious when he told her about the
loan. Third, at that time, Jeffrey had left his job at Citibank
where he had been employed for 17 years. He had gone to work for
a small consulting firm and stated that "the first day I joined
them, I knew that it was a big mistake." Jeffrey's wife had also
taken a leave of absence from her job due to pregnancy.
Jeffrey's financial situation did not allow him to make the
advance without the expectation of repayment. A bona fide loan
existed between Jeffrey and Stephen.
When petitioner purchased the note, he stepped into
Jeffrey's shoes as the creditor and was entitled to the same
rights created under the note. See, e.g., First Union Natl. Bank
of Florida v. Hall, 123 F.3d 1374 (11th Cir. 1997); Underhill v.
Commissioner, 45 T.C. 489 (1966). A bona fide loan existed
between petitioner and Stephen, and we believe that petitioner
shared Jeffrey's expectation of repayment. Furthermore, we had
an opportunity to observe petitioner's demeanor at trial and we
find him to be credible. Accordingly, petitioners are entitled
to the $100,000 nonbusiness bad debt deduction for 1993.
Issue 2. Charitable Contributions
Respondent determined that for 1993 petitioners were not
entitled to certain deductions for charitable contributions.
We begin by noting that, as a general rule, the
Commissioner's determinations are presumed correct, and the
taxpayer bears the burden of proving otherwise. Rule 142(a);
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