Joel Rappaport - Page 8

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          A.   Whether Petitioner May Deduct Various Expenses That CFB Paid           
               for Him in 2001                                                        
               Petitioner contends that he may deduct mortgage interest               
          under section 163(h)(3), real estate tax under section 164(a)(1),           
          and condominium fees under section 162(a) paid for him by CFB in            
          2001.  We disagree.  Petitioner may not deduct these items                  
          because they were paid by CFB, not petitioner.  See Doggett v.              
          Commissioner, 275 F.2d 823, 827 (4th Cir. 1960), affg. T.C. Memo.           
          1958-176; Citizens Nat. Trust & Sav. Bank v. Welch, 119 F.2d 717,           
          719 (9th Cir. 1941); Kniffen v. Commissioner, 39 T.C. 553, 567              
          (1962); Budner v. Commissioner, T.C. Memo. 1984-542.  Petitioner            
          disagrees and contends he can deduct CFB’s payments because they            
          were loans to him, which, because of the obligation to repay the            
          loans, were constructively paid by him.  We disagree.                       
               Petitioner introduced in evidence some pages from CFB’s                
          general ledger for 2001 that show that CFB routinely paid                   
          petitioner’s personal expenses.  The balance sheet on CFB’s Form            
          1120S for 2001 states that these payments were loans to                     
          petitioner.  However, neither those pages nor any other evidence            
          show that petitioner is obligated to repay CFB.  Thus, petitioner           
          has not shown that CFB’s payments on his behalf were loans to               
               Petitioner contends that Budner v. Commissioner, supra, on             
          which respondent relies, is distinguishable on two grounds.                 

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