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Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure. All dollar amounts are rounded to the
nearest dollar, unless otherwise indicated. References to
petitioner are to August V. Klaue.
The issues for decision are whether petitioners are entitled
to a nonbusiness bad debt deduction of $266,323 in 1993; and if
so, whether they are entitled to a capital loss carryover in the
amount of $184,138 in 1994. We hold they are to the extent set
out below.1
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulated facts and the accompanying exhibits are
incorporated into our findings by this reference. At the time
the petitions in these cases were filed, petitioners resided in
Spokane, Washington.
Petitioner is a sophisticated businessman, and at the time
of trial he was chairman of the board of five corporations which
were engaged in banking, lumbering, and aviation. In the mid-
1970's, petitioner befriended Roger Estes (Estes). Estes is an
1Respondent determined that for the years at issue certain
computational adjustments should be made which would reduce
petitioners' itemized deductions. The parties can make these
adjustments in their Rule 155 computation.
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