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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).
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