Derwyn J. Booker - Page 9

          on their investment.  Carter investors had the option of taking             
          their quarterly payments or electing to have the funds rolled               
          over into another promissory note.  Petitioner involved several             
          of his investment clients, including friends and relatives, in              
          Carter.  Petitioner and his clients regularly elected to reinvest           
          their quarterly interest payments.  Carter made no payments on              
          any of the notes at issue.                                                  
               An investigation, conducted by the Securities and Exchange             
          Commission in 1983, revealed that Carter did not represent any              
          doctors, had no medical accounts receivable, and was not engaged            
          in the medical factoring business.  Carter filed a petition in              
          bankruptcy in the U.S. Bankruptcy Court for the Central District            
          of California under chapter 11 of the Bankruptcy Code on December           
          8, 1983.  In 1990, the proceeding was converted to a chapter 7              
          bankruptcy proceeding.  In 1992, petitioner received a payment              
          representing some percentage of his total investment in Carter as           
          a result of the bankruptcy proceeding.                                      
               Petitioner claimed a deduction on Schedule C of his 1984               
          income tax return in the amount of $76,056 for “bad notes” with             
          respect to his dealings with Carter.  Respondent disallowed the             
          claimed deduction on the basis that it was not a bona fide debt             
          within the meaning of section 166.                                          

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011