- 53 -
it must be remembered that GAI acquired a very different company;
on the date of its acquisition by GAI, G�nther had been relieved
of all liability for its outstanding bank loans and petitioner’s
advances. While GAI was willing to acquire G�nther, with the
hope of restoring it to profitability, a loss is not any less
definite and ascertained because, in a later year, someone is
willing to take a chance on the losing venture at a nominal
price. Steadman v. Commissioner, 50 T.C. at 378; Pearsall v.
Commissioner, 10 B.T.A. 467, 469 (1928).
Respondent argues that this is not a case like those cited
by petitioner32 in which we found a lack of potential value
despite continued operation or the absence of bankruptcy or
liquidation proceedings because, in those cases, “the companies
were defunct as a result of various fundamental factors
precluding all prospect of future worth.” According to
respondent, no fundamental factor precluded G�nther’s prospects
of future worth; G�nther was simply the victim of gross
mismanagement, and the financial consequences of that
mismanagement could be reversed, and were reversed, with time.
Respondent contends that the facts of this case are more
analogous to those in Wally Findlay Galleries Intl., Inc. v.
32De Loss v. Commissioner, 28 F.2d 803 (2d Cir. 1928), affg.
6 B.T.A. 784 (1927); Preston v. Commissioner, 7 B.T.A. 414
(1927); Remington Typewriter Co. v. Commissioner, 4 B.T.A. 880
(1926); Emhart Corp. v. Commissioner, T.C. Memo. 1998-162.
Page: Previous 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 NextLast modified: May 25, 2011