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Year Beginning Balance Ending Balance
1987 $1,814,212 $1,712,517
1988 1,712,517 4,329,091
1989 4,329,091 6,702,399
Petitioner’s Income Tax Returns
On petitioner’s income tax returns for 1987, 1989, and 1990
he claimed the following losses from Wedgewood:
Year Loss
1987 $388,106
1989 651,357
1990 213,732
On petitioner’s 1990 income tax return, he also claimed his share
of the Form 4797 loss in the amount of $1,759,987 (the $1,759,987
loss).
OPINION
I. Introduction
Respondent disallowed petitioner’s pro rata share of
Wedgewood’s ordinary losses for 1987, 1989, and 1990 because
petitioner failed to convince respondent that he had an adequate
basis with respect to his investment in Wedgewood. We must
determine that basis. Respondent disallowed petitioner’s share
of the Form 4797 loss (the $1,759,987 loss) for the same reason
and because petitioner failed to convince respondent that
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Last modified: May 25, 2011