Mary S. and Gregory G. Webb - Page 5




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          term capital loss of $3,000 in each year.                                   
               In the notice of deficiency, respondent disallowed the                 
          $3,000 capital loss for each of the taxable years 1996 and 1997.            
          Respondent also made the following adjustments to petitioners’              
          Schedule A deductions:2                                                     

                                1996                        1997                      
                     Claimed   Allowed  Dis-     Claimed  Allowed  Dis-               
                                        allowed                    allowed            
          Lodging    $2,488    $-0-     $2,488   $1,058   $-0-     $1,058             
          Meals &    1,216   1,072     114      --      --      --                    
          entertain-                                                                  
          ment                                                                        
          Protective 693       -0-      693      529      -0-      529                
          clothing                                                                    
          Union dues     292    -0-     292        71      -0-       71               
          Total      $4,689     $1,072  $3,587    $1,658   $  -0-   $1,658            

          Bad Debt Deduction                                                          
               Section 166(a) generally allows a deduction for debts that             
          become wholly or partially worthless within the taxable year.  A            
          business bad debt is fully deductible from ordinary income;                 
          however, a nonbusiness bad debt of a taxpayer other than a                  
          corporation is treated as a short-term capital loss.  Sec.                  
          166(d)(1).  A nonbusiness bad debt is defined as a debt other               
          than: “(A) a debt created or acquired (as the case may be) in               
          connection with a trade or business of the taxpayer; or (B) a               
          debt the loss from the worthlessness of which is incurred in the            

               2    Amounts reflect concessions made by the parties.                  




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