- 34 -
Respondent contends that testimony by Hodges and Hogue
shows that Dondi Financial stock lost its value before 1984.
As stated above, Hodges' and Hogue's testimony is inadmissible.
See par. B, p. 17. However, even if we considered their
testimony, our conclusion would remain the same.
Hodges and Hogue testified about criminal activities by
Vernon officers. Hodges said that the FBI agents did not
consider the financial impact those activities had on Vernon
or Dondi Financial. Their testimony about Vernon's financial
status consisted of examples of bad loans and accounting
misrepresentations of delinquent loans to the Federal regulatory
authorities and was based on the 302 reports, some of which were
prepared by other agents. The testimony, although marginally
relevant to the liquidating value analysis, is not helpful in
deciding whether Dondi Financial stock had potential value.
As stated above, we conclude that petitioners' Dondi
Financial stock became worthless in 1987.
3. Conclusion
We hold that petitioners may deduct $727,600 in 1987 for
worthless Dondi Financial stock.4
D. Texana Capital Stock
1. Notice of Deficiency
4 Respondent does not contend, and we therefore need not
consider, whether petitioners had any debt-forgiveness income in
respect of the Dondi Financial stock in 1987 or 1988.
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011