Kevin P. Osborne - Page 4

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          not identify these as other than meal or entertainment expenses,            
          or otherwise argue that the expenses should be allowed in full.             
          We find petitioner’s summary to be support for respondent’s                 
          determination that the business promotion expenses are subject to           
          the 50-percent limitation under section 274(n).  Based on this              
          record, we sustain that determination.2                                     
               The second issue for decision is whether petitioner is                 
          entitled to deduct amounts representing the repayment of loan               
               Petitioner testified that he lent his business $31,712 in              
          1990 and $55,293 in 1992, and that his business partially repaid            
          these loans in the years in issue in the amount of $30,000 in               
          each year.  Petitioner claimed a Schedule C deduction of $30,000            
          for each payment; respondent disallowed the deductions in full.             
               Petitioner is not entitled to the deductions for the alleged           
          loan payments for two primary reasons.  First, and most                     
          fundamentally, there was no loan for Federal income tax purposes.           
          Petitioner’s business was a sole proprietorship--not an entity              
          separate from petitioner--and as such petitioner and his business           
          share an identity for tax purposes.  Fairchild v. Commissioner,             
          T.C. Memo. 2001-237.  Thus, any loan effectively would have been            

          2         There is no credible evidence in the record to rebut              
          the presumption of correctness which would attach to respondent’s           
          determination.  Therefore, the provisions of sec. 7491(a),                  
          placing the burden of proof on respondent, do not apply.                    

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