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B. Deduction Claimed on FYE May 31, 1993, Return
Petitioner also claimed a worthless stock deduction in the
amount of $2,435,876 in FYE 1993. This amount represents the
basis created by the first waiver subject to reinstatement less
the amount of the intercompany receivable that was deducted as a
bad debt in FYE May 31, 1992.
In order to claim a worthless stock loss, the stock must
become worthless during the taxable year. See sec. 165(g)(1).
Thus, a taxpayer claiming a worthless stock loss must prove that
the security had value anytime during the year, and that it
became completely worthless during the year the deduction is
claimed. Steadman v. Commissioner, supra at 376.
On brief, petitioner conceded that the worthless stock loss
it claimed on its FYE 1993 tax return is not deductible under
section 165 but argued instead that the amount is deductible
under section 166 as a bad debt. We reject this argument. As
discussed previously, the amounts in question were capital
contributions which cannot be deducted as bad debts under section
166. Lidgerwood Manufacturing Co. v. Commissioner, 22 T.C. 1152
(1954), affd. 229 F.2d 241 (2d Cir. 1956); Plante v.
Commissioner, T.C. Memo. 1997-386, affd. 168 F.3d 1279 (11th Cir.
1999); W.A. Krueger Co. v. Commissioner, T.C. Memo. 1967-192.
Because the amounts in question do not qualify as bona fide debt
and because petitioner conceded on brief that it is not entitled
to deduct a worthless stock loss with respect to advances made on
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