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Mr. Salmon, on the other hand, applied the cost factors for the
eastern region of the United States, which were greater than the
Newark cost factors. Mr. Salmon’s application of the greater
cost factors obviously resulted in his greater cost estimate. We
believe that Mr. Salmon’s application of the greater cost factors
was wrong.
We conclude that petitioner has failed to disprove
respondent’s determination that the depreciable basis of the
buildings at the start of the subject years was less than the
$390,014 of depreciation taken as of that date. We sustain
respondent's determination on this issue.
2. $250,000 Loan
We must determine whether petitioner has sufficient tax
basis in his Calvary stock to allow him to deduct the passthrough
losses. A shareholder of an S corporation may utilize the losses
from an S corporation only to a limited extent. The losses may
not exceed the sum of the adjusted basis of the shareholder’s
stock in the S corporation plus his or her adjusted basis of any
indebtedness of the S corporation to the shareholder. See sec.
1366(d)(1).
Petitioner again relies on his testimony to support his
assertion that the $250,000 loan from Fleet enters into this
computation. In contrast with petitioner’s testimony on the
first issue, we find petitioner’s testimony on this issue is
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