William W. Brown - Page 6

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          and that the deduction of the principal of the loan would                   
          effectively duplicate a tax benefit to petitioner.  We agree with           
          respondent’s argument.                                                      
               After borrowing the funds, petitioner used the proceeds to             
          purchase lots.  The borrowed funds used for the purchase created            
          a tax basis.  The subsequent sale of the lots resulted in either            
          a profit or loss.  At trial, petitioner acknowledged that he                
          would have reported any gain from the sale of the lots in prior             
          years by subtracting his cost from the sales price.  If                     
          petitioner had suffered a loss, he could have offset other                  
               Regardless of whether petitioner had a gain or loss on the             
          sale of the lots, the tax benefit of the cost incurred in                   
          purchasing the lots would have been realized in the year of sale.           
          The repayment of the loan’s principal is a different transaction            
          from the purchase and sale of the lots and does not create a                
          deductible business expense.  Petitioner was simply returning               
          borrowed money.  See Brenner v. Commissioner, 62 T.C. 878, 883              
          (1974); Crawford v. Commissioner, 11 B.T.A. 1299, 1302 (1928).              
          Therefore, we sustain respondent’s determination that petitioner            

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