Angelo F. DeJoy - Page 7

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          ever repaid and whether or not that loan should be treated in               
          substance as a corporate distribution that would have reduced               
          petitioner’s stock bases to zero.                                           
               Further, aside from his bases in the stock of the S                    
          corporations, petitioner has not established the worthlessness of           
          such stock.  The mere fact that petitioner’s S corporations had             
          ceased operating and owed outstanding sales and employment tax              
          liabilities does not necessarily establish the worthlessness of             
          the related corporate stock.  We conclude that petitioner is not            
          entitled to the claimed capital losses for 1990 and 1991.                   
               With regard to the section 6651 late filing additions to               
          tax, we find petitioner’s testimony credible and persuasive.                
          Under the facts of this case, the disappearance of the accounting           
          firm with many of petitioner’s and the S corporations’ business             
          and financial records and petitioner’s significant personal and             
          family problems constitute reasonable cause for the untimely                
          filing of petitioner’s Federal income tax returns for the years             
          in issue.  We do not sustain respondent’s imposition of the                 
          section 6651 late filing addition to tax.                                   
               To reflect the foregoing,                                              

                                        Decision will be entered                      
                                   under Rule 155.                                    

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