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Respondent also contends that petitioner did not provide
documentary evidence that he paid interest or principal on the
$106,795 promissory note. Respondent finally contends that
petitioner did not prove that the $77,200 he says that he paid in
cash to buy Texana Capital stock went to Lemons to buy the stock.
Petitioner testified that he paid Lemons $31,795 on the
$106,795 note and about $4,100 on the $15,605 note, and that he
stopped paying Lemons when the FSLIC's injunction made him
insolvent. Despite respondent's skepticism, we found petitioner
to be credible. We believe that petitioner made payments on the
$106,795 and $15,605 notes and that he used those notes and the
$77,200 he borrowed to buy Texana Capital stock.
3. Conclusion
We hold that petitioners' basis in the Texana Capital stock
was $199,600 and conclude that petitioners are entitled to a
$199,600 worthless stock deduction for Texana Capital stock in
1988.5
To reflect the foregoing and concessions,
Decision will be entered
under Rule 155.
5 Respondent does not contend that, and we need not consider
whether, petitioners had any debt-forgiveness income in respect
of the Texana Capital stock in 1987 or 1988.
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