Stanley P. Zurn - Page 21

          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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