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and Dr. Karason were brothers. The Court finds this difficult to
believe. Petitioner was employed by the IRS for more than 17
years either auditing or supervising the audits of taxpayers. He
should have known to document the purported purchase of the
medical equipment, the lease agreement with KCPI, and the medical
equipment’s cost and FMV.
Petitioner did not produce any documentation showing either
he invested in or purchased the medical equipment. For the
foregoing reasons, the Court concludes petitioner is not entitled
to deduct the costs of the medical equipment under sections 179
and 167.11
II. Karason Capital Partners
Petitioner contends he had a sufficient basis in KCP to
allow him to deduct $31,689 as passthrough losses from KCP in
2001.
Respondent contends petitioner failed to substantiate his
purported adjusted basis in KCP, and he cannot deduct the $31,689
of passthrough losses from KCP.
Section 704(d) limits the deduction of a partner’s
distributive share of partnership loss to the partner’s adjusted
basis in the partnership at the end of the partnership year.
Sec. 1.704-1(d)(1), Income Tax Regs. The partner’s adjusted
11 Because this Court found that petitioner did not invest
in or purchase the equipment, Dr. Karason’s bank loan payments of
$16,662 did not constitute income to petitioner.
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Last modified: November 10, 2007