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transactions and identifiable events that establish worthlessness
in 1994, and that petitioner did not sustain the loss until its
interim permits were replaced by new general permits during 1995.
We disagree.
In A.J. Indus., Inc. v. United States, 503 F.2d 660, 670
(9th Cir. 1974), the court concluded that "the subjective
judgment of the taxpayer * * * as to whether the business assets
[of the taxpayer] will in the future have value is entitled to
great weight and a court is not justified in substituting its
business judgment for a reasonable, well-founded judgment of the
taxpayer."
On August 23, 1994, Congress enacted the FAAAA. The House
conference report that accompanied the legislation indicates that
Federal preemption of State authority to regulate the price,
route, or service for intrastate transportation would destroy the
value of the pre-1995 operating authorities. See H. Conf. Rept.
103-677 at 216 (1994) ("The conferees recognize that * * *
[preemption] will eliminate the asset value of the operating
authority of those affected motor carriers."). We have no doubt
that when Congress enacted the FAAAA in August 1994 the value of
petitioner's operating authorities plummeted.
Petitioner reported to third parties that the operating
authorities were worthless during 1994. The balance sheet of
petitioner's financial statements compiled as of July 31, 1994,
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