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collect on the debt. Petitioners further contend that in 1989
the debt became worthless because the time within which to
collect under the 10-year Iranian period of limitations on
collection of this debt had expired.
Respondent’s Contentions
Respondent first contends that no sale occurred giving rise
to any debt. It is respondent’s view that petitioner disposed of
his interest in GMS and was fully paid by Ammareh. According to
respondent, the alleged $8 million sale was rigged to enable
petitioner to avoid paying American taxes. Respondent
alternatively contends:
a. Any sale between petitioner and Ammareh took place in
1979 after petitioner had established residency in the United
States. Therefore, petitioner failed to report any gain on the
sale and is limited (if there is a bad debt) to his basis in the
assets (which petitioner has not proven) or in his shares of
stock of GMS (at best $10,000).
b. GMS was a corporation owned in part by petitioners and
any sale of the “business” to Ammareh was either at the corporate
level (i.e., GMS sold its business to Ammareh) or a sale of
shares of stock from petitioner to Ammareh.
c. Finally, respondent contends that petitioner has failed
to prove when any alleged debt became worthless, arguing that any
such debt had been worthless long before the years at issue.
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