-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.Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
Last modified: May 25, 2011