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the taxpayer is the legal or equitable owner thereof and is at
least indirectly liable on the mortgage, the taxpayer may deduct
mortgage interest he or she pays relating to the property.
Under section 164, real property taxes paid by a taxpayer
may be deductible by the person upon whom the taxes are imposed.
Sec. 1.164-1(a), Income Tax Regs.; see Magruder v. Supplee, 316
U.S. 394, 396 (1942). The equitable or beneficial owner of real
property who pays taxes assessed against the property to protect
his or her interest therein may deduct the taxes he or she paid
even though legal title to the property may be held by another
person. Estate of Movius v. Commissioner, 22 T.C. 391, 394
(1954).
Generally, taxpayers bear the burden of proving that they
are entitled to deductions claimed. See Rule 142(a); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934); Hradesky
v. Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d
821 (5th Cir. 1976).
For Federal income tax purposes, a sale occurs upon the
earlier of transfer of legal title or the practical assumption of
the benefits and burdens of ownership. Keith v. Commissioner,
115 T.C. 605, 611 (2000); Baird v. Commissioner, 68 T.C. 115, 124
(1977). In deciding whether transfer of either legal title or
the benefits and burdens has occurred, we look to State law.
Keith v. Commissioner, supra at 611.
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