- 14 -
part of the proceedings. Accordingly, we find that the part of
these proceedings in which Resthaven had an interest originated
with respect to Resthaven.
After examining the evidence and analyzing the breakdown of
the legal fees, we hold that, in 1987 and 1988, 35 percent of the
amount disallowed by respondent was, in fact, incurred to
maintain the property held by Resthaven and is deductible.3 See
sec. 212; Burch v. United States, supra.
Section 1244 Stock
Ordinary loss treatment is available to those individuals
with "section 1244 stock" in a corporation with total equity of
$1 million or less. The section 1244 stock must have been
originally issued to them for money or property by a domestic
small business corporation. Sec. 1244(a), (c). Section 1244
stock loss deductions cannot exceed $50,000 (or $100,000 if a
joint return was filed) per annum. Sec. 1244(b).
For 1988 and 1989, petitioners claimed section 1244 losses
on their Diamond stock. Petitioners assert that they were
entitled to an ordinary loss deduction of $196,503, the amount of
their claimed basis in Diamond. Due to the section 1244
3 We note that $600.75 of the fees paid to Carpenter, Hein,
Carpenter was paid in 1989, but has not been placed in issue for
1989.
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011