NASHVILLE, Tenn. -- Country music star Conway Twitty and the Internal Revenue Service have a $96,000 beef to settle over some bad hamburger.
Twitty testified Thursday that after his restaurant business - Twitty Burger, Inc., -- failed, he voluntarily paid back $1 million to 75 investors to protect his 'image' and for 'moral reasons.'
'It was the morally right thing to do,' Twitty said. 'They put their money in Conway Twitty, and Conway Twitty did it all wrong - that's why I paid them back.'
IRS district counsel Richard Neubauer said 'it's nice' of Twitty to pay back his investors, but that doesn't mean the singer can deduct $96,000 of the money from his federal taxes as a business loss.
Twitty, who wore a gray blazer and an open blue silk shirt, did everything but sing during his three hours of testimony, giving autographed pictures to the judge, who said his daughter was a fan of Twitty's, and to the wife of the IRS lead counsel.
Twitty's restaurant business folded in May 1971 because of 'poor management' and Twitty decided to repay investors $1 million, saying it would have damaged his reputation with his fans if he hadn't.
'What I know about is how to make records and how to sing songs, and I'm not too good at anything else, and Twitty Burger is a prime example,' Twitty said.
Twitty filed the suit three years ago, claiming he should be allowed to deduct $96,000 of the refunds from his taxes -- as he did on his 1973 and 1974 income tax returns.
While Twitty claims the refunds were 'ordinary and necessary' business deductions, the IRS said the entertainer was never obligated legally to make the refunds and therefore cannot claim a deduction.
'Our position is that these are not ordinary and necessary expenses, they are personal,' Neubauer said. 'He was motived by some sense of moral obligation and that's fine, but it doesn't make it a business expense.'
'We're fighting over $100,000,' said William Whatley, Twitty's attorney. 'Conway could make that much money in the first three minutes of a concert. It's the principal that counts.'
Attorneys in the case said it could take as long as a year for a decision.
