Lee D. Froehlich - Page 3

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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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