Stephen P. Arnold - Page 8

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               Petitioner argues that he is entitled to deduct an $86,889             
          loss from Only Kids and that the 1998 Form 1120S, a single bank             
          statement, and his testimony establish his basis in Only Kids.              
          We disagree with petitioner when he asserts that he has                     
          established that he has a basis in Only Kids.  The Form 1120S               
          does not contain sufficient information for us to establish that            
          he has any basis in Only Kids.  Fehlhaber v. Commissioner,                  
          94 T.C. 863, 869 (1990), affd. 954 F.2d 653 (11th Cir. 1992).               
          Nor does the bank statement, which simply lists Only Kids’                  
          deposits and other credits for April 1998, establish that                   
          petitioner had any such basis.  Although petitioner observes                
          correctly that the statement reports that funds of $105,000 were            
          wired into Only Kids’ bank account during April 1988, the                   
          statement does not indicate the source of those wire transfers.             
          In that petitioner testified vaguely and incoherently that the              
          deposits were from his personal account, and that the record does           
          not otherwise support that testimony, we decline to find the                
          subject matter of that testimony as a fact.  We conclude that               
          petitioner’s adjusted basis in Only Kids was zero for 1998 and,             
          hence, that he was not entitled to deduct the referenced loss.3             

          3 We are mindful that petitioner, as the only shareholder of                
          Only Kids, obviously had to have at least once invested in the              
          corporation and that Only Kids’ 1998 Form 1120S reported that               
          Only Kids’ balance sheet as of December 31, 1998, listed capital            
          stock and additional paid-in-capital of $425,000 and $2,049,649,            
          respectively.  In that the record contains no credible evidence             
                                                             (continued...)           





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