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my good name, my goodwill.” There is no evidence to indicate,
however, to what extent petitioner’s failure to make the tax
payments would have resulted in any damage to his reputation or
creditworthiness. Petitioners have introduced no credible
evidence to show that petitioner made the tax payments to protect
the reputation of any business operation conducted in
petitioners’ individual capacities. On the basis of petitioner’s
testimony, we are unable to conclude that the tax payments would
have represented ordinary expenses to advance any business
carried on in petitioners’ individual capacities, as opposed to
capital outlays to establish or purchase goodwill or business
standing, see Welch v. Helvering, 290 U.S. 111 (1933); Koree v.
Commissioner, 40 T.C. 961, 965-966 (1963), or contributions to
the capital of Griffin California (consistent with respondent’s
characterization in the notice of deficiency), see Gantner v.
Commissioner, 905 F.2d at 244.
Petitioners have failed to introduce credible evidence that
they were engaged, in their individual capacities, in a trade or
business for which the tax payments would have represented
ordinary and necessary expenses. Consequently, we sustain
respondent’s determination.
To reflect the foregoing,
Decision will be entered
for respondent.
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Last modified: May 25, 2011