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purchase of capital stock in Annabelle's created a debtor-
creditor relationship between petitioners and the restaurant.
Consequently, we conclude that the payment of $3,000 to
Annabelle's was not bona fide debt. Petitioners have not
advanced or proven any other theory upon which a deduction could
be premised. Accordingly, we hold that petitioners are not
entitled to a bad debt deduction in the amount of $3,000.
As noted above, the penalty has been conceded. We have
considered all of petitioners' remaining arguments and find them
to be without merit.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011