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From the period the loan was made through the year in issue,
the Attiehs advised petitioner that they intended to repay the
loan. In a fax dated August 3, 1993, Thair informed petitioner
that the Attiehs would begin paying $2,000 per month starting
September 15, 1993, which was repeated in a fax dated August 19,
1993. During this period and through the time of trial, Thair
and petitioner spoke often on the telephone. Petitioner remained
in a close personal relationship with the Attiehs and
occasionally sought further business dealings with them.
The Skating Palace operated as a going concern until at
least 1998.
On the 1994 return, petitioner claimed a bad debt deduction
of $70,000. In the notice of deficiency, respondent determined
that petitioner was not entitled to the claimed bad debt
deduction because he did not (1) establish a business purpose for
the loss, (2) show that the loss resulted from a bad debt and in
particular his bad debt, and (3) show that all reasonable steps
were taken to collect the debt.
Joint Filing Status
On their 1993 joint Federal income tax return, petitioner
and his wife at the time Margit Julicher (Mrs. Julicher) selected
“married filing joint” status. Petitioner, Mrs. Julicher, and
Mr. Finder (as return preparer) signed the 1993 return. On the
1994 return, petitioner selected “married filing separate”
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