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corporations. See sec. 1012. Distributions by S corporations
without accumulated earnings and profits, on the other hand,
decrease the shareholders’ bases in their stock in the
corporations. See sec. 1367(a)(2)(A).
Under section 165, taxpayers may take deductions for losses
sustained in sales or exchanges of capital assets and for
worthless securities. See sec. 165(a), (f), and (g). Such
losses and deductions are limited, however, to the extent
prescribed by the Code. Taxpayers other than corporations may
offset capital gains by capital losses. See sec. 1211(b).
Capital losses in a given year are limited by the amount of the
capital gains plus $3,000. See id. In addition, taxpayers are
allowed flow-through losses and deductions in connection with S
corporations only to the extent of their adjusted bases in the S
corporations. Individual taxpayers may carry over excess capital
losses to subsequent years. See sec. 1212(b).
In this case, the evidence does not adequately establish
petitioner’s tax bases in, or the worthlessness of, petitioner’s
stock in the S corporations to entitle petitioner to the losses
claimed. Although the payments petitioner made on behalf of his
S corporations would increase petitioner’s bases in the stock of
the S corporations, petitioner has not adequately established his
bases in the stock. For example, petitioner has not established
whether the $148,574 purported corporate loan to petitioner was
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