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III. The Form 4797 Loss
A. Introduction
Petitioner reported his share of the Form 4797 loss, in the
amount of $1,759,987. Principally, the Form 4797 loss resulted
from Wedgewood’s disposition of furniture, fixtures, restaurant
equipment, a liquor license, and a liquor inventory (the assets).
The assets were disposed of pursuant to the deed. At least some
of the assets were subject to liens of secured creditors totaling
$1,865,000 (the liens). Wedgewood’s adjusted basis in the assets
at the time of disposition was $2,506,244. Pursuant to the deed,
Wedgewood received nominal consideration of $1, and the
disposition was part of a bankruptcylike proceeding carried out
under the laws of New Jersey. See N.J. Stat. Ann. secs. 2A:19–1
to 2A:19-50 (West 1987). The disposition was to an assignee for
the benefit of Wedgewood’s creditors (the assignee), whose duty
it was to liquidate the assets and apply the proceeds to reduce
Wedgewood’s indebtedness. See In re: Gen. Assignment for
Benefit of Creditors, 169 A.2d 236 (N.J. Super. Ct. 1961).
B. Code and Regulations
In pertinent part, section 1001(a) provides that the loss
from the disposition of property shall be the excess of the
11(...continued)
here in question because we believe that the parties are in
agreement that we should make an across-the-board decision with
respect to the Wedgewood payments.
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