Robert A. Read - Page 2

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          deduction is based upon the alleged worthlessness of his right of           
          subrogation which arose when petitioner was forced to honor a               
          guarantee of his partnership's debt.  Thus, resolution of the               
          1984 deficiency depends upon the validity of the claimed 1986 bad           
          debt deduction.1                                                            
               Specifically, the issues for decision are:                             
               (1)  Whether petitioner “paid” a debt from VIP Investors to            
          Security Bank in his capacity as a guarantor during the 1986                
          taxable year; and, if so                                                    
               (2)  whether an alleged debt from VIP Investors to                     
          petitioner, created by the right of subrogation, became worthless           
          during the 1986 taxable year; and, if so                                    
               (3) whether the debt which arose by right of subrogation was           
          a business or a nonbusiness bad debt.                                       
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts and attached exhibits are incorporated             
          herein by this reference.  Petitioner, Robert A. Read, resided in           
          Tulsa, Oklahoma, at the time he filed his petition.                         

               1  It is well settled that this Court may determine the                
          correct amount of a NOL for a year not in issue as a preliminary            
          step in making determinations for the taxable year or years at              
          issue.  Sec. 6214(b); Lone Manor Farms, Inc. v. Commissioner, 61            
          T.C. 436, 440 (1974), affd. without published opinion 510 F.2d              
          970 (3d Cir. 1975); ABKCO Indus., Inc. v. Commissioner, 56 T.C.             
          1083, 1088-1089 (1971), affd. on other issue 482 F.2d 150 (3d               
          Cir. 1973), and cases cited therein.                                        

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