Harry D. Bledsoe and Annie L. Bledsoe - Page 22

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            circumstances."  Marcello v. Commissioner, 380 F.2d 499, 506 (5th                           
            Cir. 1967), affg. in part and remanding in part 43 T.C. 168                                 
            (1964) and T.C. Memo. 1964-299.                                                             
                  Regarding the section 1244 loss and loss carryover                                    
            petitioners claimed for 1988 and 1989, respectively, the evidence                           
            produced was insufficient for us to conclude that they had paid                             
            more than $7,500 for their section 1244 stock.  Petitioners'                                
            argument that the subsequent payments were in exchange for                                  
            section 1244 stock may be a plausible one but is an untested                                
            concept.  Petitioners had met the other requirements of section                             
            1244 but failed solely because the subsequent payments could not                            
            be factually linked to the 7,500 shares of section 1244 stock                               
            issued in 1987.  Consequently, we find that petitioners were not                            
            negligent with respect to their section 1244 loss deduction.                                
                  Respondent disallowed legal fees in 1987 and 1988, asserting                          
            that these were personal expenses of petitioners rather than                                
            business expenses of Resthaven.  We have found that 35 percent of                           
            the disallowed expenses were, in fact, incurred by Resthaven in                             
            the ordinary course of its cemetery business.  However, our                                 
            determination required that we make a reasonable estimate, as                               
            petitioners' records were quite difficult to analyze in this                                
            case.  With respect to the disallowed portion of legal fees which                           
            we sustain and regarding the other disallowed items conceded by                             

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