Stanley P. Zurn - Page 13

               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              
               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                   

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