- 54 -
Commissioner, T.C. Memo. 1996-293, and Datamation Servs., Inc. v.
Commissioner, T.C. Memo. 1976-252. We disagree.
In Wally Findlay Galleries Intl., Inc. v. Commissioner,
supra, we concluded that the taxpayer’s French subsidiary was
insolvent by only $26,228 and that the taxpayer had failed to
sustain its burden of proving that the subsidiary lacked
potential value. In this case, G�nther’s insolvency,
conservatively calculated, totaled several million dollars and
was coupled with severe operational problems exacerbated by inept
and perhaps dishonest management. In Datamation Servs., Inc. v.
Commissioner, supra, we concluded that the Datamation subsidiary
was barely insolvent and needed only minor capital financing in
order to continue as a going concern.
The severity of G�nther’s financial problems was evident,
not just to petitioner but to third parties who considered
acquiring G�nther after May 31, 1992. G�nther’s situation more
closely resembled the dire financial situations described in
cases cited by petitioner. E.g., Ainsley Corp. v. Commissioner,
332 F.2d 555 (9th Cir. 1964), revg. T.C. Memo. 1963-183; De Loss
v. Commissioner, 28 F.2d 803 (2d Cir. 1928), affg. 6 B.T.A. 784
(1927); Steadman v. Commissioner, 50 T.C. 369 (1968); Preston v.
Commissioner, 7 B.T.A. 414 (1927); Emhart Corp. v. Commissioner,
T.C. Memo. 1998-162; Harrington v. Commissioner, T.C. Memo. 1972-
181; Richards v. Commissioner, T.C. Memo. 1959-64.
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