- 39 -
T.C. 226, 347 (1991). Moreover, under Rule 142(a), respondent
would bear the burden of proof as to the issue whether the
$10,000 is sales income. Even if we permitted respondent to
raise this new theory, he would not prevail upon it because he
cannot carry his burden. The record shows that Mr. S. ordered
tapes from petitioner because he could get a “better rate” than
elsewhere. He wrote her checks totaling $10,000. One of those
checks, for $3,000, was returned unpaid. We believe that, if
petitioner provided a better rate than other sellers, her loss of
$3,000 on the sale likely prevented her from earning any profit
on the transactions. In any event, respondent has not shown
otherwise. We accordingly do not sustain any portion of
respondent’s determination that petitioner had $18,500 in
unreported income from Mr. S. in 1989.
Respondent determined that petitioner had unreported income
of $5,000 in 1989 from a loan transaction with an individual
named Howard S. On brief, respondent argues that this was a
“fraudulent” loan transaction in that petitioner had no intention
of repaying, making the original loan amount income to her in
1989.
We have found that Howard S. lent petitioner $5,000 in 1989
and that by the first quarter of 1991 she had repaid him $1,300.
Mr. S. acknowledged as much in early 1991 in an invoice that he
admits initialing. He subsequently sued petitioner in August
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