- 5 -
It is not clear from the record when respondent commenced
the audit of petitioners’ return. Even if we were to conclude
that section 7491 were applicable, petitioners have not complied
with the requirements of section 7491. Accordingly, the burden
of proof remains upon petitioners.
Petitioners generally allege that the loss was incurred as
the result of an uncollectible judgment of $195,000 awarded to
CJP Systems, Inc. pursuant to a cross-claim filed in United
States v. Certified Sur. Mgmt., Inc. et al., docket No. 91-0093-
A. Petitioners have neither explained why they are entitled to
deduct on their individual return the loss allegedly incurred by
their corporation, nor demonstrated how the loss was incurred.
For example, petitioners have not argued that they are entitled
to a worthless stock deduction under section 165(g), that the
loss represents a deductible bad debt under section 166, or any
other theory. Petitioners also have not explained their position
as to the proper characterization of the loss. Petitioner
testified that they contributed money to CJP Systems, Inc. as
capital contributions, not as loans. As petitioner explained at
trial: “Any money that had been invested in the company I think
should be considered a capital loss.”
Petitioners assert that even if they are not entitled to
deduct a loss with respect to contributions made to CJP Systems,
Inc. they are nevertheless entitled to deduct a loss with respect
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011