- 10 -
Respondent computed the basis of petitioner’s investment in WIS
and the allowable loss for 1991 as follows:
Contributions or loans, 1990
Personal credit card advances $19,500
Proceeds of personal loan 14,000
Check drawn on own account 15,000
Own funds 29,000
Basis in WIS, 1990 77,500
Loss claimed from WIS, 1990 65,169
Basis in WIS, 1991 12,331
Allowable portion of loss
claimed from WIS, 1991 12,331
Basis in WIS, 1992 - 0 -
Allowable portion of loss
claimed from WIS, 1992 - 0 -
The record does not disclose why, after concluding that
there was “no basis in fact” for claiming a loss that represented
a deficit in shareholder’s equity, respondent nevertheless
allowed $12,331 of that loss. At trial, respondent’s counsel
conceded that the pass-through loss from WIS for 1991 was
allowable in excess of $12,331 to the extent that petitioners
could document any additional adjusted basis of petitioner’s
investment in WIS.
With respect to SPS losses of $40,560 and $36,464 claimed as
deductions on petitioners’ returns for 1992 and 1993, respondent
determined that $879 was allowable for 1992, and no amount was
allowable for 1993. The notice of deficiency does not identify
the source of the $879 of stock or loan basis implied by
respondent’s determination for 1992, and respondent did not offer
clarification at any time in these proceedings. At trial, the
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