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determine that it is not deductible as a business bad debt, then
petitioner is entitled to claim the $400,000 as a short-term
capital loss; i.e., a nonbusiness bad debt. Sec. 166(d)(1) and
(2). We also consider whether petitioner is liable for an
accuracy-related negligence penalty pursuant to section 6662(a)
for the taxable year 1990.2
FINDINGS OF FACT3
Lee D. Froehlich (petitioner), at the time of the petition
in this case, resided in Simi Valley, California. Petitioner, at
various times, has been engaged in the field of selling new and
used automobiles. Petitioner's professional career has been in
the retail automobile business, including positions such as
salesperson, sales manager, general manager, and, ultimately,
owner of a dealership. For the relevant years, petitioner was
president and owner of FRO Enterprises, Inc., an Acura automobile
dealership (the auto dealership).
In 1967, petitioner was inducted into the U.S. Army, thus
interrupting his college education at the University of Nebraska.
In 1969, petitioner began developing skills and expertise selling
automobiles in Kansas City, Kansas. Petitioner also received
management training during this particular interval. From 1972
2 Respondent has conceded that petitioner is not liable for
the sec. 6661 addition to tax for the taxable year 1987.
3 The parties' stipulations of facts and exhibits are
incorporated by this reference.
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