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Petitioner claimed $5,195 in interest expenses on his
Schedule C for 2000. Respondent disallowed the entire deduction.
Petitioner’s only substantiation was a copy of a check he had
issued to his mother in the amount of $5,000. Notations on the
check indicate that the $5,000 was to be put towards numerous
uses, including loan payment and interest in the amount of
$4,575, petitioner’s March 2000 mortgage in the amount of $425,
and a car loan in the amount of $300. At trial, petitioner
testified that he was unsure how much of the $5,000 check
constituted interest.
Notably, petitioner did not have a written loan agreement.
The loan was based on an oral agreement. Petitioner’s mother
kept records relating to the loan in a written journal. Those
records indicate that petitioner was not held to a strict
repayment schedule and that the interest rate fluctuated.
Petitioner has failed to satisfy the requirements to deduct
interest on an intrafamily loan. Accordingly, the Court sustains
respondent’s determination on this issue.
E. Accounting Fees
Petitioner claimed $1,750 in fees he allegedly paid to his
mother for accounting services, tax preparation, and
representation, on his 2000 Form 1040 Schedule C. Respondent
disallowed the entire deduction. The only substantiation
petitioner offered was an invoice from his mother’s business that
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