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time of liquidation, SDG's assets consisted of office furniture,
a client list, the car, and goodwill. Upon liquidation,
petitioner received the client list, the automobile (valued at
$1,000), and some office furniture (valued at $1,000). The
record does not reflect what, if anything, Mr. Vaughn received
upon liquidation.
Subsequent to the liquidation of SDG, petitioner made
several payments to Mr. Vaughn in accordance with the guaranty.
Petitioner's records reflect that he paid Mr. Vaughn $1,858.18
during 1991. In 1991, petitioner sold the client list for
$13,500.
On the purported copy of petitioner's original return,
petitioner claimed a capital loss of $1,500 from the sale of
SDG's client list. Petitioner arrived at this amount by
subtracting his asserted basis in the client list, $15,000, from
the amount he received upon its sale, $13,500. Petitioner
calculated his basis in the client list as equal to the amount of
money he contributed to SDG in exchange for SDG stock, plus SDG's
outstanding loan balance to petitioner, less the amount he
received upon liquidation.
At trial, petitioner argued that his basis in the client
list was $24,283, or $9,283 plus the $15,000 oral guaranty.
Petitioner contends that he recognized a loss of $10,783 when he
sold the client list for $13,500 in 1991.
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