- 5 -
ownership of patents, and the amount of competition that
Pharmacare faced in the marketplace. In 1979 and 1980, Vavlitis
also persuaded petitioner to make substantial unsecured loans to
Pharmacare in order to keep the company running. Vavlitis failed
to provide promissory notes for these loans despite repeated
requests by petitioner.
On June 12, 1980, creditors of Pharmacare filed a chapter 7
involuntary bankruptcy petition against the company in the
U.S. Bankruptcy Court for the Middle Division of Florida. As an
unsecured creditor of Pharmacare, petitioner did not receive any
payment from the Pharmacare bankruptcy to reimburse his
investment or his loans. On their Form 1040, U.S. Individual
Income Tax Return for 1982, petitioners deducted a loss from
their Pharmacare investment and loans as a section 165 theft
loss. Respondent audited the 1982 return and disallowed the
loss.
On March 9, 1981, petitioner organized The Chamberlin
Corporation (The Chamberlin Corp.), a Delaware corporation
licensed to do business in Florida, for the purpose of continuing
the Largo, Florida, operation. Petitioner became an 80-percent
shareholder in The Chamberlin Corp., was elected chairman of the
board of directors, and was hired as the chief executive officer.
Petitioner did not receive a wage for the services he rendered in
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011