Warren Jack Kidder and Barbara Jeanne Kidder - Page 3

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          the advances were paid directly to third parties on Mr. Bogue’s             
          behalf.  After Mrs. Kidder’s 1987 marriage to Mr. Kidder and                
          through the years under consideration, petitioners continued to             
          advance funds to Mr. Bogue.  The advances were not formalized, no           
          collateral or security was provided, and no written demands for             
          repayment were made by petitioners.                                         
               On Schedule D of their 1992 income tax return, petitioners             
          claimed a $145,267 short-term capital loss attributable to a                
          “Loss on Personal Loan - David Bogue”.  On that same Schedule D,            
          petitioners reported a long-term capital gain of $83,445, which             
          left a net short-term capital loss of $61,822, of which $3,000              
          was claimed for 1992.  The remaining $58,882 short-term capital             
          loss was carried over to 1993 and applied against an $89,814                
          long-term capital gain reported for 1993.  Respondent disallowed            
          the entire $145,267 loss claimed with respect to Mr. Bogue,                 
          explaining that petitioners had “not established that the amount            
          was a bad debt arising from a true debtor-creditor relationship”.           
               On February 28, 1992, Mr. Bogue and his wife (Mrs. Bogue),             
          engaged in a business known as Garage Doors Unlimited,                      
          voluntarily filed for bankruptcy protection.  In Mr. and Mrs.               
          Bogue’s initial petition seeking bankruptcy protection,                     
          petitioners were not listed as creditors.  After speaking with              
          Mr. and Mrs. Bogue’s bankruptcy attorney, petitioners, based on             
          their estimates of the outstanding advances, decided to file a              

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