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Petitioner testified that FabuGlass correctly reported on
its second amended return for 1994 that its business activity was
the production of reinforced plastic materials. We are not
convinced by that testimony because, as discussed above, the
weight of the evidence shows that FabuGlass was an investment
company and had stopped doing fiberglass-related business before
1990.
e. FabuGlass Was Not Largely an Operating Company in
1990-94
We conclude that FabuGlass was not largely an operating
company in 1990-94.
4. Conclusion
We conclude that petitioner’s FabuGlass stock was not
section 1244 stock,5 and thus, petitioners may not deduct an
ordinary stock loss of $100,000 under section 1244 in 1995.6
5 In light of our conclusion, we need not decide
respondent’s contentions that petitioners have not established
(1) that the stock was issued for money or other property (other
than stock or securities), (2) that FabuGlass satisfied the 50
percent gross receipts test, and (3) whether FabuGlass stock
became worthless in 1995.
6 Petitioners may not deduct any losses under sec. 165(g)
relating to the worthlessness of petitioner’s FabuGlass stock
because the record does not contain sufficient information to
compute petitioner’s basis in that stock in 1995. Petitioner’s
testimony leaves many unanswered questions about his basis. The
only documents in the record to support petitioners’ computation
of basis are the contract showing the 1980 purchase price of real
property ($225,000) that petitioner contributed to FabuGlass in
1985 and bank statements showing transfers from petitioner
totaling $111,000 which petitioners contend were to the First
National Bank of Conway. Petitioners have not shown that the
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