- 2 -
decision are: (1) Whether a deduction claimed by petitioners as
a business bad debt became worthless in 1990, and (2) whether the
debt involved qualifies as a "business" bad debt under section
166.2 The case was submitted on the basis of a stipulation and
two supplemental stipulations of fact.
Petitioners Harold and Christine Couch (Dr. and Mrs. Couch)
resided in Simsbury, Connecticut, at the time they filed their
petition in this case. From 1969 until August 1984, Dr. Couch, a
Ph.D. research scientist, was employed by United Technologies
Corporation (UTC). In 1978, Dr. Couch began supervising efforts
to reduce the Titanium Diboride coating process ("coating
process") to commercial practice. Titanium Diboride (TiD2) is an
extremely hard metal which can be electroplated on a number of
surfaces. An employee of Hamilton Standard, a Division of UTC,
had invented the coating process in 1970. Sometime in 1971, that
employee transferred to the United Technologies Research Center
to reduce the process to commercial practice. UTC terminated its
efforts to reduce the coating process to commercial practice in
1982.
When Dr. Couch left UTC's employ in August 1984, he believed
that substantial commercial and military applications for the
coating process existed and that the process could be reduced to
2 The Commissioner has conceded in a supplemental
stipulation that petitioners are not liable for the penalty.
Also, concessions by the parties have removed other issues from
this case. See infra note 5.
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