- 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
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