T.C. Memo. 1996-270
UNITED STATES TAX COURT
RICHARD A. AND CAROL B. LITTLE, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 27374-93. Filed June 12, 1996.
P owned stock in Dondi Financial (DF). DF held 97
percent of the stock of Vernon (V). V was a savings
and loan. The FHLBB seized V, terminated its
operations, and appointed the FSLIC as its receiver in
March 1987. DF filed for bankruptcy in May 1987.
P owned stock in Texana (T). T held 98 percent
of the stock of Texana Savings & Loan (TSL). The FHLBB
put TSL in receivership and appointed the FSLIC to
liquidate TSL in August 1988. P deducted losses for
worthless stock from DF in 1987 and T in 1988. R
disallowed part of the DF loss and all of the T loss.
R amended the answer, contending that P owed an
additional deficiency because the DF stock became
worthless in 1985.
R called two FBI agents as witnesses and offered
into evidence 264 pages of interview notes. In
response to P's hearsay objection, R argued that the
agents' oral testimony and notes were records or
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