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Inc., in which James was a shareholder.13 According to James,
the stock was issued in Candid’s name on his lawyer’s advice.
The structure that James chose for his investment in Quotum
provides the framework for our analysis. Although Candid owned
the stock in Quotum which petitioners now seek to write off as
worthless, petitioners did not present any evidence regarding
what position, if any, Candid took concerning its ownership
interest in Quotum’s stock. Petitioners did not introduce any of
Candid’s Federal income tax returns into evidence, nor did they
prove how the alleged loss generated by the worthlessness of
Quotum’s stock affected, if at all, petitioners’ Federal income
tax returns for 1992. Petitioners did not prove whether Candid
had distributable net income or loss for 1992, nor did they prove
their basis, if any, in Candid’s stock. In short, petitioners
have failed to provide the necessary information to determine
whether Candid had a distributable net loss for 1992 and, if so,
who may claim the loss. They have also failed to prove what
their basis in Candid’s stock was in 1992.
Petitioners have not argued that Candid’s ownership of
Quotum’s stock should be disregarded. The record is what it is;
in its present state, the record is simply inadequate to support
13 The testimony concerning the extent of James’ ownership
interest in Candid is conflicting. See supra note 6.
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