-33-
with California precedent. Accordingly, petitioner is entitled
to $12,000 alimony deduction for each taxable year in issue and
the $11,988 disallowance is in error.
Issue 5. Whether Petitioner Is Entitled To Claim a Loss From a
Real Estate Activity, and, If So, the Character of Such a Loss
Petitioner owned several properties in Texas. B.R.
Pritchett (Mr. Pritchett) was the president of Third Aquarius
Corp., which was involved in real property management and
renovation. Mr. Pritchett sought funds from petitioner to invest
in renovation activity, and petitioner advanced $25,000 and
$20,000 during 1982.
In 1985, petitioner asked Mr. Pritchett for the return of
some of his investment. Mr. Pritchett told petitioner that times
for the real property business were tough and that many people
were losing money. Petitioner then hired an attorney in Dallas,
Texas, and provided the attorney with information relating to Mr.
Pritchett’s activities. Ultimately, in 1985 petitioner’s
attorney commenced a lawsuit against Mr. Pritchett to recover
petitioner’s money. A lis pendens was filed with respect to
certain of Mr. Pritchett's real property at the time of
commencement of the lawsuit. Petitioner never recovered any
amount of the money advanced to Mr. Pritchett.
Petitioner claimed a $35,000 loss for his 1986 taxable year,
which respondent disallowed on the grounds that petitioner failed
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