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shareholders). RTA reported a loss to the shareholders for 1991,
and, on account thereof, each claimed a loss deduction in
determining his or her 1991 Federal income tax liability.
Respondent disallowed those loss deductions, and the sole issue
remaining for decision is whether RTA sustained the loss that
gave rise to the shareholders’ claimed deductions.
FINDINGS OF FACT
Introduction
Some of the facts have been stipulated and are so found.
The stipulation of facts, with accompanying exhibits, is
incorporated herein by this reference. At the time of the filing
of the petitions in these cases, all petitioners resided in
Florida.
Resource Technology Associates, Inc. (RTA)
RTA, a Florida corporation, was organized on July 26, 1989.
RTA was organized for the purpose of investing in a new and
speculative technology for the safe and efficient disposal of
used truck and automobile tires. Shortly after it was organized,
RTA elected pursuant to section 1362(a) to be an S corporation
within the meaning of section 1361(a). RTA’s taxable year is the
calender year.
Environmental Disposal Systems, Inc., and the Tire Transformation
System
Prior to organizing RTA, the shareholders had researched and
investigated an opportunity for investing in a product that would
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