Christopher K. and Brenda M. Cox, et al. - Page 14




                                       - 14 -                                         
               the obligation.  Prior to that crucial act, ‘liability’                
               may exist, but not debt to the shareholders.                           
               Neither Gregory nor Deborah made any payments to the                   
          Oklahoma Bank, Christopher, or Cox Tomato regarding loan 91850.8            
          Consequently, neither Gregory nor Deborah made any economic                 
          outlay with regard to the 91850 loan, and the loan does not                 
          increase their bases in Cox Tomato under section 1366(d)(1).                
                    2.   Christopher’s Increase in Basis                              
               Christopher contends, in the alternative, that loan 91850              
          should increase only his basis in Cox Tomato because only he                
          owned the warehouse and made payments on the loan.  Apparently              
          assuming that loan 91850 was really a personal loan to                      
          Christopher and not to Cox Tomato, respondent concedes that                 
          Christopher is entitled to increase his basis in Cox Tomato to              
          the extent that Christopher proves how much of the loan proceeds            
          was paid over to Cox Tomato.  Respondent contends, however, that            
          Christopher failed to introduce “sufficient credible evidence to            
          establish the amount contributed to Cox Tomato and the amount               


               8Deborah argued in connection with the 91850 loan that she             
          contributed or loaned $75,000 to Christopher for improvements to            
          the warehouse and that her transfer of funds shows she was a co-            
          owner of the warehouse.  As discussed supra, however, ownership             
          is not controlling here.  Moreover, Deborah has not argued or               
          proven that she is entitled to adjust her basis for this amount             
          in any event.  She offered no documentation of her $75,000                  
          transfer of funds, nor did she prove that the funds went to Cox             
          Tomato.  We are not required to accept a taxpayer’s self-serving            
          testimony as evidence, particularly in the absence of                       
          corroborating evidence.  Tokarski v. Commissioner, 87 T.C. 74, 77           
          (1986).                                                                     





Page:  Previous  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  Next

Last modified: May 25, 2011