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Petitioners have offered no competent evidence regarding the
independence of the Harwood Group trustee or the foregoing
criteria bearing thereon. As noted, Harlan’s testimony tends to
show that the monthly rent was based on Harlan’s perception of
Harwood Group’s “need” for income rather than the fair rental
value of the leased property and, further, that it was Harlan
rather than an independent trustee who made the determinations
regarding the amount of rent. On this record, we sustain
respondent’s determination to disallow the $6,000 deduction
claimed for rent expense.
B. Taxes
Respondent also determined that a $102 deduction claimed by
Floors Trust for taxes should be disallowed for failure to
substantiate or to show business purpose. Petitioners have
offered no credible evidence with respect to this issue, Harlan
having testified only that he had “no clue” regarding what the
deduction was for. Accordingly, the burden of proof remains with
petitioners, see sec. 7491(a), and they have offered no competent
evidence to meet that burden.14 We therefore sustain
respondent’s determination.
14 Petitioners argue for the first time on brief that the
deduction was for State income tax paid in 1997. As previously
noted, unsupported statements in a brief do not constitute
competent evidence. Rule 143(b); Niedringhaus v. Commissioner,
99 T.C. 202 (1992); Viehweg v. Commissioner, 90 T.C. 1248 (1988);
Castro v. Commissioner, T.C. Memo. 2001-115.
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