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T.C. Memo. 1998-338
UNITED STATES TAX COURT
ESTATE OF ROBERT L. WAGNER, DECEASED, RUTH R. WAGNER, PERSONAL
REPRESENTATIVE, AND RUTH R. WAGNER, ET AL.,1 PETITIONERS v.
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
Docket Nos. 8581-96, 25799-96, Filed September 23, 1998.
25800-96, 25801-96.
RTA, an S corporation within the meaning of sec.
1361(a), I.R.C., reported a loss to its shareholders on
account of a failed investment in certain technology.
The shareholders deducted their pro rata shares of that
loss on their returns. Respondent disallowed those
deductions on the ground that the loss was not
evidenced by a closed and completed transaction in the
year the loss was claimed on account of the reasonable
prospect of a recovery under a lawsuit against the
supplier of the technology.
Held: Respondent’s determination is sustained
because petitioners have failed to prove that RTA’s
chances for success on the lawsuit were remote or
1 Cases of the following petitioners are consolidated
herewith: Walter W. Manley II, docket No. 25799-96; Richard T.
Wagner and Margie S. Wagner, docket No. 25800-96; Charles E.
Lecroy II and Karen A. Lecroy, docket No. 25801-96.
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