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petitioner’s reply brief, he argues that the challenged payments
were ordinary and necessary business expenses and thus
deductible.
For a guaranteed payment to be a partnership deduction, it
must meet the same tests under section 162 as it would if the
payment had been made to a person who is not a member of the
partnership. See sec. 707(c); sec. 1.707-1(c), Income Tax Regs.
Section 162(a) generally allows a deduction for “all the ordinary
and necessary expenses paid or incurred during the taxable year
in carrying on any trade or business”. Petitioner bears the
burden of establishing which fees, or portions thereof, are
deductible. See Rule 142(a); Welch v. Helvering, 290 U.S. 111
(1933).
Petitioner neither established I-Tech’s entitlement to the
deductions nor substantiated the amounts claimed as guaranteed
payments. We sustain respondent’s determination for the years in
issue and hold that I-Tech is not entitled to deduct guaranteed
payments of $79,867 in 1984, $179,501 in 1985, and $91,221 in
1986.
To reflect the foregoing and the parties’ concessions,
Decision will be entered
pursuant to Rule 155.
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