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After concessions by the parties, the issue for decision is
whether petitioners may take a business bad debt deduction for
payment made on a guarantee of corporate indebtedness.
Background
This case was submitted fully stipulated under Rule 122.1
The stipulation of facts and exhibits are incorporated herein by
this reference and found accordingly.
Petitioners, husband and wife, resided in Syosset, New York,
at the time of the filing of the petition. They filed their 1988
Federal income tax return untimely on April 17, 1992, and their
1989 Federal income tax return untimely on April 15, 1993. On
January 12, 1995, respondent mailed to petitioners a statutory
notice of deficiency for the 1988 and 1989 taxable years.
Dutchess Processing Company, Inc. (Dutchess), was
incorporated in August 1974, to engage in the processing,
preserving, and canning of apples and apple byproducts. Its
shareholders and officers were petitioner Glenn Peterson, his
father John Peterson, and Woodrow Pereira.2
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
2 The stipulation of facts refers only to the status of
these individuals as officers, but petitioners' opening brief
describes them as the "three shareholders" who were "all active
(continued...)
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