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Federal income tax in the amount of $6,287.
After petitioner's concessions2, the sole issue for
decision is whether petitioner is entitled to deduct an ordinary
loss in the amount of $18,750 as a result of his investment in
Geotech Energy Corporation.
Some of the facts have been stipulated and are so found.
The stipulations of fact and attached exhibits are incorporated
herein by this reference. Petitioner resided in Spokane,
Washington, on the date the petition was filed in this case.
Petitioner was married during the year in issue and filed a 1991
joint Federal income tax return with his wife. A statutory
notice of deficiency was mailed to petitioner and his wife.
However, only petitioner Alfred C. Heston has filed a petition
with this Court.
According to his testimony in November 1987, petitioner
invested $18,750 in Geotech Energy Corporation (hereinafter
Geotech) to purchase a 1/4 percent overriding royalty interest in
the Rio Blanco County, Colorado oil, gas, and other mineral lease
that had been procured by Geotech (hereinafter Rio Blanco lease).
Petitioner testified that Geotech obtained oil leases and sold
overriding royalty interests in those oil leases to individual
2 In her notice of deficiency, respondent determined that
petitioner's employee business expenses should be disallowed to
the extent of $1,775 and a $10,000 long-term capital loss should
be recharacterized as a nonbusiness bad debt, and therefore
deducted as a short-term capital loss. Petitioner concedes these
issues.
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