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whether this document was sent with the forms mentioned above.
Attached to the Tax Shelter Questionnaire is the following
statement:
On April 30, 1979, taxpayer sold his business, Gulf Marine
Services, a construction and salvage company operating
solely in the country of Iran, for $8,000,000 to an Iranian.
* * * Two million dollars of said purchase price was
deposited into a bank in Iran, and the remaining balance of
six million dollars was to be paid in intervals agreed upon
between the parties in the future, with all such future
payments to be deposited in a bank in Iran to the taxpayer’s
account.
No payments since the date of sale have been paid, although
taxpayer has made numerous attempts to make collections on
this note. However, due to the political and economic
situation in Iran, it was evident in 1985 that no further
payments on this note will ever be received by the taxpayer,
nor will he have access to the funds previously deposited in
the Iranian bank.
Consequently, the taxpayer’s loss in the business bad debt
will decrease his personal income and no Federal income tax
is expected to be owed for 1985.
On April 1, 1986, Ms. Kauls sent a copy of the Khossravi
appraisal to the IRS. On the basis of this appraisal, Ms. Kauls
stated that petitioners were planning on claiming a loss of $1.1
million on their 1985 income tax return.
In a letter to petitioners dated May 2, 1986, Ms. Kauls
updated petitioners on the status of their 1985 return and
requested further information. Ms. Kauls additionally stated:
We will continue to check on the deductibility of the loss
of your business in Iran (Gulf Marine Services) on your 1985
tax return. However, as we discussed, you will probably not
be allowed the deduction due to the fact that it appears you
sold the business prior to your leaving Iran and becoming a
U.S. resident.
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