Estate of Robert L. Wagner, Deceased, Ruth R. Wagner, Personal Representative, and Ruth R. Wagner, et al. - Page 18

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          at the end of 1991 but only that they did not wish to bear the              
          risk associated with any further investment.                                
               E.  Conclusion                                                         
               Petitioners have failed to prove that RTA’s claim against              
          EDS and its shareholders was speculative or wholly without merit.           
          RTA instigated a lawsuit, which, at least initially, it                     
          prosecuted diligently and, in any event, eventually settled on              
          favorable terms.  We believe that the evidence does not establish           
          a closed and completed transaction with respect to the TTS                  
          investment in 1991 because there was a reasonable prospect of               
          recovery on the lawsuit at the end of 1991.  Accordingly, no loss           
          deduction is allowable to RTA for 1991.                                     
          V.  Conclusion                                                              
               We have concluded that RTA did not suffer a deductible loss            
          with respect to the TTS during 1991.  Therefore, no deductible              
          loss may be passed through to the shareholders in that year.                
          Respondent’s determinations of deficiencies in the shareholders’            
          Federal income tax liabilities are sustained.                               

                                                  Decisions will be entered           
                                             for respondent.                          












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