Opinion ID: 489393
Heading Depth: 2
Heading Rank: 2

Heading: interest expense deductions

Text: 11 Reasoning that the amounts of the nonrecourse notes executed by each partnership greatly exceeded the films' values, the Tax Court also held that petitioners' interest deductions were improper. We agree. See, e.g., Brannen, 722 F.2d at 701-02; Estate of Franklin v. Commissioner, 544 F.2d 1045, 1048-49 (9th Cir.1976). 12 Nonrecourse notes represented nearly three million dollars of the purchase price for the film properties. The partnerships never made payments on the notes. The Tax Court found that petitioners' evidence of fair market value was contradictory and that their expert was unqualified. 49 T.C.M. (CCH) at 1309. In contrast, the Tax Court credited two briefer expert reports introduced by the Commissioner. 5 13 Petitioners had the opportunity but failed to introduce stronger, more pertinent evidence of value. 6 Petitioners failed to demonstrate that the debts were genuine. 7 See Independent Electric Supply, 781 F.2d at 727 (citing Hirsch, 315 F.2d at 738 (taxpayer has burden of showing that facts bring case squarely within deduction provisions; clearly erroneous standard applies)). The Tax Court's acceptance of the Commissioner's experts and rejection of the reports offered by petitioners was not clearly erroneous. Disallowance of petitioners' interest deductions was proper. Knetsch v. United States, 364 U.S. 361, 81 S.Ct. 132, 5 L.Ed.2d 128 (1960); Deegan v. Commissioner, 787 F.2d 825 (2d Cir.1986); Brannen, 722 F.2d at 701-02; Odend'hal v. Commissioner, 80 T.C. 588, 604-05 (1983), aff'd, 748 F.2d 908, 912 (4th Cir.1984), cert. denied, 471 U.S. 1143, 105 S.Ct. 3552, 86 L.Ed.2d 706; Narver v. Commissioner, 75 T.C. 53, 98 (1980), aff'd per curiam, 670 F.2d 855 (9th Cir.1982); 26 U.S.C. Sec. 163(a).CONCLUSION 14 The decision of the Tax Court is AFFIRMED. 8