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taxpayer establishes his entitlement to, but not the amount of,
the deductions, Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d
Cir. 1930), any such estimate must have a reasonable evidentiary
basis, Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).
Without a reasonable evidentiary basis, the Court’s allowance of
deductions would amount to unguided largesse. Williams v. United
States, 245 F.2d 559, 560 (5th Cir. 1957).
In the case at hand, petitioner argued that once upon a time
his shares in Horn Construction and Horn Enterprises were worth
millions of dollars, and that now they are worthless. A
taxpayer’s loss, however, is limited to his adjusted basis in the
property, not the property’s highest fair market value. Sec.
165(b). In general, a loss resulting from worthless stock is
deductible only in the year the stock becomes worthless,12 see
sec. 165(g)(1), and does not enter into the computation of net
operating loss carrybacks and carryforwards, sec. 172. Even if
we accepted petitioner’s vague and unsupported allegations of
value, petitioner offered no evidence to show his adjusted basis
in the stock, or when the stock became worthless. Likewise,
there is no evidence in the record of a stockholder note and its
12It is noteworthy that petitioner’s taxable year 1995, the
year in which Horn Construction’s chapter 11 bankruptcy case was
converted to chapter 7, is not before the Court in this
proceeding. On neither his 1994 return nor his 1996 return did
petitioner claim any loss with respect to his stock or debt
interest in Horn Construction.
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