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$400,000 amounts involved in the questioned transactions. These
documents were photocopied by respondent's counsel and an
assistant.
The conference began with a settlement discussion between
petitioner and respondent's counsel. The brief settlement
discussion was followed by the consideration of the merits of
respondent's legal stance. During the conference, respondent's
counsel informed petitioner and his accountant about the Tax
Court's stipulation requirement. Towards the end of the meeting,
respondent's counsel advised petitioner to obtain counsel. After
the meeting, petitioner and respondent's counsel engaged in a
series of telephone conversations discussing whether there were
two separate $400,000 amounts claimed in the 1990 Federal income
tax return or whether there had been a duplication of a $400,000
amount.
Prior to trial, the counsel who represented respondent
during the pretrial phase withdrew to enable him to testify about
statements made by or on behalf of petitioner at the conference.
New counsel represented respondent at the trial.
OPINION
The primary issue for our consideration is whether petitioner's
loss of $400,000 resulting from his guaranty is deductible as
"ordinary" or "capital". Preliminary to considering the merits
of the primary issue, we consider an evidentiary matter.
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