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Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
After concessions, the issue for decision is whether
petitioner has established that a $100,000 promissory note became
worthless as of the end of 1994.
Background
This case was submitted under Rule 122 on stipulated
exhibits and without a trial.
At the time the petition was filed, petitioner resided in
Chicago, Illinois.
On December 31, 1993, petitioner, a securities broker,
entered into a note purchase agreement with Thinking Machines
Corp. (TMC). In connection with the note purchase agreement,
petitioner provided TMC with $100,000 in cash in exchange for a
$100,000 promissory note from TMC. Under the terms of the
promissory note, TMC was obligated to pay petitioner interest at
12 percent per year until the $100,000 principal amount of the
promissory note becomes due on the earlier of March 31, 1995, or
on the date of the closing of a public or private stock offering
by TMC.
TMC was engaged in the design, development, manufacture, and
marketing of high performance supercomputers and related
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