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capital loss on the sale of the Atascadero property claimed by
petitioner in his 1995 return, petitioner in his petition claimed
a capital loss deduction for the debt in the amount outstanding
on the Atascadero loan.
OPINION
The issues for decision are whether petitioner:
(1) Correctly calculated his basis in computing a loss on the
sale of the Atascadero property, or (2) in the alternative, is
entitled to a deduction under section 166 for a worthless
nonbusiness debt.
Respondent’s determination in the notice of deficiency is
presumed correct, and petitioner bears the burden of proving it
is incorrect. Rule 142(a);1 Welch v. Helvering, 290 U.S. 111,
115 (1993). We hold that petitioner incorrectly calculated his
basis in the Atascadero property. Petitioner’s basis in the
Atascadero property was $207,500, which entitles petitioner to a
$7,214 loss on the December 29, 1995, sale of the property to
Bryan Dunnivan for $200,286. Additionally, we hold that
petitioner is entitled to a $131,828 deduction for a nonbusiness
bad debt under section 166 for 1995.
1Sec. 7491, which is effective for Court proceedings that
arise in connection with examinations commenced after July 22,
1998, places the burden on the Commissioner in certain
circumstances. However, petitioner has not contended, nor is
there evidence, that the examination of his 1995 return commenced
after July 22, 1998, or that sec. 7491 applies.
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