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The issues for decision are whether petitioners, under
section 165, are entitled to a deduction in 1996 for either an
ordinary abandonment loss or a theft loss in the amount of
$25,800. On brief, respondent agrees that petitioners sustained
an ordinary loss of $25,800 due to abandonment but contends that
the loss was not sustained by petitioners during 1996.
Petitioners contend they sustained the loss during 1996 either by
a theft that they discovered during 1996 or by an abandonment
that occurred during 1996.2
Some of the facts were stipulated. Those facts, with the
annexed exhibits, are so found and are incorporated herein by
reference. At the time the petition was filed, petitioners were
legal residents of Las Vegas, Nevada.
Sometime in early 1994, Hem Gupta (petitioner) responded to
an advertisement in a Las Vegas newspaper soliciting participants
in a trade or business activity that involved the sale of
telephone debit cards and musical greeting cards. The promoter
of the enterprise was a company based in Atlanta, Georgia, known
as Business Motivations, Inc./Telebanc (BMI). On or about March
24, 1994, after having been contacted by BMI, petitioner agreed
2 It appears that petitioners' claim to an abandonment
loss is not based on respondent's concession but is based on
petitioners' contention of an abandonment of their claim for
reimbursement or recovery of the moneys paid by petitioner to the
promoter of the aborted business activity described more fully in
the following pages.
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