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Discussion
Petitioner claims that the $677,652 he advanced and lost
constitutes an ordinary loss that may be deducted for 1986 and
1987 or 1988, the year originally claimed. Petitioner has
structured his broad-brush approach into several alternatives
requiring our analysis of both the timing and character of the
loss.
We first consider petitioner’s contention that, in contrast
to the manner in which he reported it, the loss should have been
reported as an ordinary loss under section 1652 or a business-
related bad debt loss under section 166. Losses under section
165(c) are limited to those incurred in a trade or business, in a
transaction entered into for profit, or from some form of
casualty. A business loss under section 166 would also require
the showing that the debt was created in connection with a trade
or business. Petitioner contends that his loss is attributable
to a trade or business or profit-motivated transaction.
Petitioner also argues, in the alternative, that he abandoned his
joint venture interest with Ms. Jackson and his interest in the
road construction equipment during 1988. Respondent counters
that any loss that petitioner may be entitled to should be
characterized as a nonbusiness bad debt under section 166.
2 Section references are to the Internal Revenue Code as
amended and in effect for the taxable years under consideration.
Rule references are to this Court’s Rules of Practice and
Procedure.
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