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On September 29, 1993, petitioner wrote a letter to AWS
requesting that his four units in WCTVA be redeemed for the
amount of his original investment, $25,000, plus 10-percent
interest. He again requested a return of his investment in a
letter to AWS dated October 10, 1993. He received no response to
these two letters. On October 14, 1993, petitioner tried to
telephone AWS but was only able to reach its answering service.
Since October 1993, petitioner has made numerous attempts to
contact AWS and has sought the assistance of several government
agencies and courts in his effort to recover his investment.
Petitioner did not claim a loss with respect to his
investment with AWS on his 1993 return. He first considered
claiming a loss at the suggestion of one of respondent's revenue
agents during an audit of his 1993 return.
Section 165(a) allows as a deduction any loss sustained
during the taxable year and not compensated for by insurance or
otherwise. In the case of an individual, the deduction is
allowable for losses incurred in any transaction entered into for
profit. Sec. 165(c)(2).
Respondent argues that any loss that petitioner incurred
with respect to his investment with AWS was not sustained during
his 1993 taxable year. With respect to the proper year to claim
a deduction for a loss, section 1.165-1(d), Income Tax Regs.,
provides:
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Last modified: May 25, 2011