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are to the Tax Court Rules of Practice and Procedure, unless
otherwise specified.
Following a concession by petitioner,1 the only issue for
decision is whether petitioner is entitled to a section 166 "bad
debt" deduction for funds it advanced to one of its construction
superintendents, who is also the son of its president and
controlling shareholder. Petitioner deducted the full amount of
these advances remaining unpaid (plus accrued "interest") on the
return for its tax year ending July 31, 1992. Respondent denied
this deduction in its entirety. The deficiency still disputed
for petitioner's tax year ending July 31, 1993, is a
computational adjustment arising from a reduced carryforward that
would result if we should sustain respondent's disallowance of
the bad debt deduction for 1992.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found; the
stipulation of facts and related exhibits are incorporated by
this reference.
Petitioner's principal place of business was Redmond,
Oregon, when it filed the petition. Petitioner uses the accrual
method of accounting for Federal income tax purposes.
1 Petitioner has conceded a $12,805 "shareholder expenses"
deduction claimed for the tax year ended July 31, 1992.
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