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concerning the timing of the loss. Petitioner contends that the
losses occurred in the years (1986 and 1987) he advanced money to
the joint venture with Ms. Jackson. In the alternative,
petitioner argues that he abandoned his interest in the joint
venture and/or that it was worthless as of the end of 1988.
Respondent argues that petitioner’s interest was not abandoned or
worthless during 1988 and that the possibility of recoupment
remained through 1989 and until 1990, when Ms. Jackson’s
enterprise was petitioned into bankruptcy.
The parties have agreed that petitioner made payments to
Cities during 1986 and 1987 in the amounts of $463,944 and
$213,708, respectively. Petitioner’s argument that those amounts
represent losses for 1986 and 1987 is based on section 165(c)(1).
In other words, petitioner contends that the joint venture
incurred an operating loss for 1986 and 1987. Petitioner did not
offer an accounting of the joint venture's or Cities' income and
expenses for the year 1986 or 1987. Accordingly, the record does
not support petitioner’s entitlement to an operating loss for
1986 or 1987. In addition, even if petitioner had shown a loss
for the venture, he was entitled to 50 percent of the profits,
and, presumably, he would bear 50 percent of any losses. To be
entitled to deduct an abandonment loss under section 165, a
taxpayer must show: (1) An intention on the part of the owner to
abandon the asset, and (2) an affirmative act of abandonment.
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