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Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure. All references to petitioner are to Roger E.
Goodrich.
The only issue for decision involves petitioners’
entitlement under section 166 to a claimed $184,874 business bad
debt deduction.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
When the petition was filed, petitioners resided in Heber City,
Utah.
In 1978, petitioner and two other individuals formed Applied
Information Systems (AIS) as a Utah corporation. AIS was engaged
in the business of computer software development. In 1986,
petitioner sold all of his stock in AIS for $750,000 in cash, and
petitioner transferred the $750,000 into an account with Merrill
Lynch in the name of a family trust (family trust account).
Prior to the sale of AIS, petitioners had established the family
trust as a grantor trust for estate planning purposes.
On October 13, 1986, petitioner purchased from Robert E.
Wilcox (Wilcox) for $232,511 all of the outstanding stock of
Ultimate Intermountain (UI). UI was engaged in the business of
distributing computer hardware.
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