-427-
It is submitted that Kanter’s $50,380 1986
Schedule E interest deduction must be viewed in
conjunction with the Schedule E rents reported and
depreciation claimed from the equipment leasing
activity. Kanter introduced his Schedule E with
respect to the computer leasing activity involved * * *
revealing that he reported rents in 1986 from the
leasing activity involved of $118,835, and claimed
depreciation of $61,730, for a net taxable gain of
$6,725.
Respondent contends petitioners failed to meet their burden
of proof under Rule 142(a).
B. Analysis
The Equitec computer leasing transaction referred to above
relative to the Kanters’ 1984 tax year was resolved in
respondent’s favor. With regard to the 1984 loss issue, we held
that the Kanters failed to sustain their burden of proof because
they failed to offer substantive evidence on the merits of the
activity. For the 1986 tax year, which involves the same Equitec
activity, petitioners claim that either the interest claimed for
1986 should be allowed as a deduction, or the net income reported
from the activity for 1986 should be disregarded or eliminated.
Here again, the record does not include any substantive
evidence regarding the merits of the Equitec computer leasing
activity. There likewise is no evidence regarding the merits of
the indebtedness upon which the interest payments were
purportedly made by the Kanters. As noted in petitioners’ brief,
respondent disallowed the various expenses claimed in connection
with Equitec “on a variety of grounds typically used to attack
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