Richard Mark Hilton - Page 5




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                                     Discussion                                       
               The Commissioner’s determinations are presumed correct, and            
          generally taxpayers bear the burden of proving otherwise.2  Rule            
          142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).                    
               Tax deductions are a matter of legislative grace with the              
          taxpayer bearing the burden of proving entitlement to the                   
          deductions claimed.  Rule 142(a)(1); INDOPCO, Inc. v.                       
          Commissioner, 503 U.S. 79, 84 (1992).                                       
          Whether the Distribution Is Includable in Income                            
               Generally, any amount “paid or distributed out of” an IRA is           
          includable in gross income in the year received.  Sec. 408(d)(1).           
               Petitioner asserts that the distribution is not income,                
          arguing that the distribution is a “loan-type situation”                    
          permitted under the Code and by the Internal Revenue Service for            
          self-employed individuals.  Petitioner claims that his “intent”             
          was to borrow from the IRA for his business venture and to repay            
          the IRA at a later date.                                                    
               Respondent argues that the distribution is income because              
          petitioner did not roll the distribution into an eligible IRA               
          within 60 days from receipt as required by section 408(d)(3)(A).            
          The Court agrees with respondent.                                           

               2Petitioner has not raised the issue of sec. 7491(a), which            
          shifts the burden of proof to the Commissioner in certain                   
          situations.  This Court concludes that sec. 7491 does not apply             
          because petitioner has not produced any evidence that establishes           
          the preconditions for its application.                                      





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