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In these circumstances, it was not arbitrary for respondent
to conclude that Bonnevista and Castle Towers were still in
existence in March 1993, and that petitioner’s debts to the
corporations were discharged when petitioner first represented to
respondent that he no longer owed the debts previously reported
to be owing to his wholly owned corporations. We conclude that
respondent has made the requisite minimal evidentiary showing
linking petitioner to the discharge of indebtedness income in
question. Accordingly, the presumption of correctness remains
intact, and petitioner bears the burden of rebutting the
presumption by showing that the inference of gross income from
discharge of indebtedness was unreasonable. See Page v.
Commissioner, 58 F.3d 1342, 1347-1348 (8th Cir. 1995), affg. T.C.
Memo. 1993-398; Blohm v. Commissioner, supra at 1549.
B. Net Operating Loss Deduction
As regards respondent’s determination disallowing
petitioners’ claimed net operating loss deduction for lack of
substantiation, the requirement that respondent make a predicate
evidentiary showing is inapplicable; petitioners bear the burden
of proving their right to, and the amount of, the claimed
deduction. See Amey & Monge, Inc. v. Commissioner, 808 F.2d 758,
761 (11th Cir. 1987), affg. T.C. Memo. 1984-642; Gatlin v.
Commissioner, supra at 923.
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