- 6 -
corporation. Stanley Prentice and his wife also returned their
100 shares of stock in Color Trick to the corporation during
February 1989.
Toward the end of 1989, petitioner concluded that Color
Trick could not generate sufficient income to pay its bills, that
its business could not be turned around, and that he could not
continue advancing money to the business. Petitioner’s efforts
to sell Color Trick around that time were unsuccessful. Except
for activities connected with winding down its business, Color
Trick ceased operations at the end of 1989. Its equipment was
sold or foreclosed upon and available funds were used to repay
certain creditors, not including petitioner.
Leland Prentice had no assets from which petitioner’s loans
could have been repaid. Petitioner did not attempt to foreclose
on or to sell the patent. The process had become obsolete by the
end of 1989 because of the widening availability of digital
printers. Petitioner received no repayment of principal or
payment of interest with respect to the loans and advances he had
made to Color Trick.
On his Federal income tax returns for 1987, 1988, and 1989,
petitioner claimed the following losses with respect to Color
Trick:
Year Loss
1987 $9,053
1988 42,982
1989 78,356
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