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Fifth Circuit held that the Commissioner has no duty to
investigate reports by third-party payors that are not disputed
by the taxpayer. The Parkers did not dispute their receipt of
the payments in question. Like the taxpayers in Parker,
petitioner failed to file income tax returns and does not deny
that she received unreported income in the years in issue.
3. Conclusion as to Burden of Proof
We conclude that respondent’s determination is presumed to
be correct, and petitioner bears the burden of proof. Rule
142(a)(1); Parker v. Commissioner, supra.
B. Whether Petitioner May Deduct Margin Interest
The parties dispute whether petitioner may deduct margin
interest that she paid to Dain Rauscher totaling $1,738.04 in
1996, $1,844.25 in 1997, and $3,764.40 in 1998. Respondent
contends that petitioner may not deduct margin interest in the
years in issue because she was an investor and not a trader.
1. Whether Petitioner’s Status as an Investor or Trader
Controls Whether She May Deduct Margin Interest
Respondent contends that petitioner may not deduct margin
interest in 1996-98 because she is an investor and not a trader,
and thus the margin interest is not properly allocable to a trade
or business. We disagree that petitioner’s status as an investor
or trader determines whether she may deduct margin interest.
Generally, an individual taxpayer may not deduct personal
interest. Sec. 163(h)(1). However, investment interest is not
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