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amount. Furthermore, securing petitioner’s obligation to repay
the $175,000 with the mortgage on petitioner’s real property
effectively prevented any accretion to petitioner’s wealth
attributable to the Amoco advance when the payment was made.
Respondent asserts that petitioner received the Amoco
advance under a claim of right and, therefore, the advance was
income to petitioner in 1996. We disagree. The claim of right
doctrine relates only to taxation of income. The receipt of
money by a borrower in a loan transaction is excluded from the
doctrine. James v. United States, 366 U.S. at 219; see also
Krakowski v. Commissioner, T.C. Memo. 1993-266. We have found
that the $175,000 Amoco advance was a loan to petitioner. Thus,
the claim of right doctrine does not apply.
To reflect the foregoing,
Decision will be entered for
petitioner.
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