Joseph Nachman - Page 2

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                  After concessions,1 the issues for decision are:                                     
                  1.  Whether petitioner's transfer of $350,000 to Swirl, Inc.                         
            (Swirl), in October 1986 was a loan or a contribution to capital.                          
            We hold that it was a loan.                                                                
                  2.  Whether, based on our holding that petitioner lent                               
            $350,000 to Swirl, petitioner may deduct as a bad debt $290,325,                           
            as respondent contends; $308,000, as petitioner contends; or some                          
            other amount.  We hold that petitioner may deduct the amount that                          
            Swirl owed petitioner less the amount that petitioner owed Swirl                           
            on December 31, 1988.                                                                      
                  3.  Whether petitioner is liable for the addition to tax for                         
            failure to file under section 6651(a).  We hold that he is.                                
                  Section references are to the Internal Revenue Code in                               
            effect for the year in issue.  Rule references are to the Tax                              
            Court Rules of Practice and Procedure.                                                     
                                         FINDINGS OF FACT                                              
                  Some of the facts have been stipulated and are so found.                             
            A.    Petitioner                                                                           
                  Petitioner lived in New York City when he filed the                                  
            petition.  Petitioner received a bachelor of science degree in                             
            economics from the Wharton School at the University of                                     
            Pennsylvania in 1968.  Larry Nachman is petitioner's brother.                              


                  1 Respondent concedes that petitioner is not liable for the                          
            addition to tax for negligence for 1988.                                                   





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