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Respondent contends, however, that petitioner properly reported
the interest income on his return because it was earned on funds
he had taken from his corporations and converted to his own
dominion and control.
In line with our earlier holding that the transfer of funds
to the ANB accounts before yearend 1988 constitutes a return of
those funds to petitioner’s corporations, it follows that the
interest earned on the funds in the ANB accounts in 1988 is not
taxable to petitioner. We so hold.
Depreciation Issue
On his 1988 return, petitioner reported rental income of
$10,430 and deducted rental expenses of $19,410 in addition to
depreciation of $10,74453 relating to the Lincoln Avenue II
property. Respondent determined that petitioner was not entitled
to deduct the rental expenses or the depreciation. Petitioner
has conceded that he is not entitled to deduct the rental
expenses. Petitioner has the burden of proving that he is
entitled to the depreciation deduction. Rule 142(a).
Petitioner contends that he is entitled to a depreciation
deduction of $9,963 relating to the Lincoln Avenue II property.
He maintains that he bought the property during 1984 for either
$150,000 or $160,000 and that he financed the purchase with a
53 The parties have stipulated that the appropriate
depreciation, if any is allowable, is $9,963.
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