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stock any loss that resulted from its sale or disposition would
be treated as a long-term capital loss. Secs. 1222 and 1223.
Secondly, the parties agree that petitioner suffered a loss on
the sale of his BCBI stock (the resolution of the issue here
under consideration could have an effect on the amount of the
loss; otherwise there is no dispute between the parties on the
point). Lastly, the parties apparently agree that petitioner's
BCBI stock constituted small business stock within the meaning of
section 1244(c), subject to the provisions of section 1244(a) and
(b), which under the circumstances of this case would allow
petitioners to treat $100,000 of the loss sustained on the sale
of the stock as an ordinary loss. In this regard we note that
petitioners' treatment of the transaction on their 1991 amended
return (treating the entire loss as ordinary) is patently
incorrect and inconsistent with section 1244, which as indicated
allows for only a limited amount of the loss to be treated as
ordinary. Sec. 1244(b)(2). From the allegations in the petition
and the arguments in petitioners' brief, we assume that
petitioners have recognized their error on this point, and now
support their claim for a 1992 net operating loss carryover
deduction upon the theory that they were entitled to a previously
unclaimed bad debt deduction in 1991.
In general, section 166 allows a taxpayer a deduction for
any debt that becomes worthless within the taxable year. Sec.
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