Robert R. Plante and Mary B. Plante - Page 15

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          the basis of the record before us, we have no choice but to deny            
          their claim to the deduction, at least to the extent of $155,000,           
          and turn our attention to the portion of the deduction                      
          represented by the notes.                                                   
               Narrowing our focus on the treatment of the notes in                   
          connection with disposition of petitioner's BCBI stock leads us             
          to conclude that the balance of petitioners' claim for a bad debt           
          deduction (the amount represented by the notes) must also be                
               Assuming, without finding, that the advances evidenced by              
          the notes represent bona fide loans from petitioner to BCBI, it             
          is clear that the underlying "debt" was satisfied, "paid",                  
          canceled, or forgiven in connection with petitioner's sale of his           
          stock to the Hansens.  The agreement clearly makes the                      
          disposition of the notes part of the sale transaction and                   
          characterizes their disposition as a contribution to BCBI's                 
          capital.  Petitioners have presented us with nothing that                   
          suggests otherwise.  Petitioners' argument that the amount                  
          evidenced by the notes should now result in a section 166 bad               
          debt deduction is inconsistent with the nature of the underlying            
          transaction.  Respondent's arguments regarding the application of           
          Commissioner v. Danielson, 378 F.2d 771 (3d Cir. 1967), revg. 44            
          T.C. 549 (1965), notwithstanding, petitioners have presented no             
          evidence that attempts to recharacterize the nature of the                  

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