Santar S. Yei and Grace H. Yei - Page 2

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          petitioners properly claimed a $60,000 capital loss as a result of           
          petitioner Santar Yei's surrender of 60,000 shares of stock in               
          Cirtex, Inc. (Cirtex) to Cirtex, and (2) whether petitioners are             
          liable for the accuracy-related penalty under section 6662.                  
               We must also decide the following matters, which petitioners            
          raised in their petition: (1) Whether petitioners may reclassify as          
          a repayment of loans (and treat as nontaxable) $45,000 of the                
          $84,000 they reported as wage income; (2) whether petitioners are            
          entitled to an $18,241 deduction in 1989 to offset dividend income           
          that they received from Cirtex and reported in 1988; (3) whether             
          petitioners may claim bad debt deductions for: (a) a $9,100 payment          
          they made to Albert Chang on behalf of Cirtex to purchase his stock          
          in Cirtex, (b) a $1,500 loan they made to Cirtex to permit that              
          company to purchase shares of its stock that were owned by Ba Cac            
          Luong, (c) a $4,000 loan they made on Cirtex's behalf to Esstec,             
          and (d) $1,500 reported as income from the sale of an automobile             
          that petitioners claim they never received; (4) whether petitioners          
          are entitled to a $1,600 deduction as an unreimbursed business               
          expense for the purchase of Cirtex stock held by Katherine                   
          Cunningham; and (5) whether petitioners may reduce the amount of             
          gain they reported from the sale of Solectron Corporation                    
          (Solectron) stock by $19,000, which amount petitioners gave to               
          family members.                                                              
               All section references are to the Internal Revenue Code for             
          the year under consideration.  All Rule references are to the Tax            




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