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During the year in issue, petitioner was involved in other legal
proceedings of a personal nature, for which there is no record of
any expense. The logical inference from the record is that the
payments to Morse were personal expenses inappropriately deducted
by petitioner.
With respect to a deduction that was claimed for interest on
an alleged business loan, petitioner’s tax return preparer, Wayne
Paul (Paul), testified that he introduced petitioner to the
lender, Paladine Combine. The payments claimed to support the
deductions were made to Paul, allegedly to be forwarded to
Paladine Combine. Paul refused to provide an address, a
telephone number, or the name of an individual associated with
Paladine Combine. Petitioner testified that he did not fill out
a loan application or provide a financial statement to secure the
loan. Petitioner produced only a note in which Paladine Combine
agreed to pay principal and interest to petitioner.
In support of certain travel expenses that were deducted,
petitioner called Joseph D. Gordon (Gordon) to testify. Gordon
claimed to have assisted petitioner in “finding funds” and with a
personal bankruptcy problem. Petitioner and Gordon traveled to
Las Vegas, Nevada, during 1996 and purportedly had a meeting at a
casino with a prospective lender. Gordon’s testimony was
questionable, was lacking in specifics, and was insufficient to
support a finding of business purpose for the travel expenses.
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