Horace D'Angelo - Page 11

                                        -11-                                          
          petitioner, stated the disallowed amounts and the years to which            
          they pertain, and adequately explained the calculations employed            
          in arriving at them.                                                        
          II. Debt Settlement                                                         
               The parties agree that the $392,796 bad debt deduction                 
          resulted from the forgiveness in the debt settlement agreement of           
          that amount of accrued rent and, more specifically, a settlement            
          of the proceedings discussed above.  The parties do not dispute             
          that PNC was entitled to deduct the eliminated debt as a bad debt           
          but challenge only the amount of that deduction allocable to                
          petitioner.                                                                 
               Petitioner argues on brief that the debt was settled after             
          Crittenton’s termination and that he, as a 50-percent shareholder           
          of H.K. Peach, is entitled to deduct half ($196,398) of the debt.           
          Petitioner focuses primarily on respondent’s reference to the all           
          events test and argues that this test was not met before                    
          Crittenton’s redemption in that the redemption was a vital term             
          of settlement.  Alternatively, petitioner argues, respondent’s              
          earlier resolution of this issue, coupled with respondent’s                 
          representations to the Court, means that respondent is now                  
          estopped from challenging the amount of his deduction in this               
          proceeding.                                                                 
               Respondent argues on brief that the debt was settled before            
          Crittenton’s termination.  Thus, respondent concludes, only half            






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