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Respondent determined that petitioners: (1) Were not
entitled to deductions for a $159,565 ordinary loss and a $58,863
net operating loss carryforward, relating to 1989; (2) failed to
report $2,302 and $4,495 of capital gain income relating to stock
sales in 1990 and 1991, respectively; (3) failed to file timely
returns relating to 1989, 1990, and 1991 and are liable for
section 6651 additions to tax; (4) failed to pay estimated income
tax relating to 1990 and 1991 and are liable for section 6654
additions to tax; and (5) were negligent in determining their
1989 tax liability and are liable for a section 6662 penalty.
Petitioners bear the burden of proof, yet have failed to present
sufficient credible evidence to establish that respondent's
determinations are incorrect. See Welch v. Helvering, 290 U.S.
111, 115 (1933). Accordingly, we sustain respondent's
determinations.
Respondent also determined that petitioners, in 1989, were
not entitled to deduct $29,086 of mortgage interest relating to
properties owned by Sandew. Petitioners contend that Sandew was
bankrupt, and, as guarantors of Sandew's loans, petitioners were
obligated to pay Sandew's interest expenses and, therefore,
entitled to a deduction pursuant to section 163. Generally, a
guarantor is not entitled to an interest expense deduction with
respect to payments made in fulfillment of a mere guaranty
obligation. See Hynes v. Commissioner, 74 T.C. 1266, 1287-1288
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