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petitioners failed to carry their burden of proof, that Mr.
Martinez received the amounts reported on the Forms 1099 by Life
Bank, Geylikman, Alpa, and Svetella under a claim of right, and
that Mr. Martinez must include those amounts in his income. See
Liddy v. Commissioner, T.C. Memo. 1985-107 (taxpayer did not meet
his burden of proof where he inadequately explained what he did
with the funds he received), affd. 808 F.2d 312 (4th Cir. 1986).
However, we shall allow Mr. Martinez a deduction of $1,000 for
the amount that Mr. Ortiz testified under oath he received from
Mr. Martinez.
B. Mrs. Martinez
Mrs. Martinez testified that she spent the $3,150 she
received from the County on her grandchildren because she
believed the money belonged to them and that the County only paid
it to her “because she was taking care of the kids.” Mrs.
Martinez failed to provide any credible evidence, however, to
support her claim that the money belonged to her grandchildren.
For example, Mrs. Martinez presented no evidence that her use of
the County funds was restricted, that she spent the money on her
grandchildren other than by choice, or that the funds were
excludable from her income by operation of law.5 Consequently,
5For example, sec. 131(a) provides that gross income shall
not include amounts received by a foster care provider as
qualified foster care payments. See Cato v. Commissioner, 99
T.C. 633 (1992). Petitioners do not contend that Mrs. Martinez
(continued...)
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