Harold T. and Christine B. Couch - Page 2

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          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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