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OPINION
The primary issue in this case is whether petitioner is
entitled to an ordinary loss deduction versus a capital loss
deduction for the advances lost in the business venture with Mr.
Kelley and TIC/Multilogic. Respondent challenges only the
character of the losses. Petitioner argues that the losses are
ordinary under several alternative theories. Respondent asserts
that the losses are capital and, therefore, subject to the
capital loss limitation rules of section 1211.
I. Section 1244--Losses on Small Business Stock
Petitioner's first argument is that he is entitled to a
section 1244 stock loss in the amount of $83,9893 as originally
claimed on his return. Respondent disallowed petitioner's
section 1244 worthless stock loss, determining that the stock
issued did not satisfy all of the requirements for qualification
of section 1244 stock. Section 1244 provides that any loss
resulting from the sale of section 1244 stock shall be treated as
an ordinary loss. Sec. 1244(a). To qualify as section 1244
stock, the stock must be common stock issued by a domestic "small
business corporation", as defined in section 1244(c)(3), and the
3Petitioner offered no evidence indicating how this figure
was arrived at. We assume that the $83,989 is composed of the
$65,066 in checks and a portion of the lease payments made by
petitioner. Respondent does not challenge the amount of the
deduction.
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