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of the loss was allowable. Respondent has not sought to disallow
the remaining $2,379 of the loss, and we therefore do not address
respondent’s calculation of the allowable amount of the loss.
2. Petitioner’s Business Activities
During the year in issue, petitioner was engaged in certain
business consulting activities. In connection with these
consulting activities, petitioner served as the chief executive
officer of an entity named North American Free Trade Association
(NAFTA), which is incorporated in Mexico. In this position,
petitioner would provide services to foreign companies seeking to
do business in Mexico. Petitioner would allow his clients, the
foreign companies, to use the address of NAFTA’s office in Mexico
City. NAFTA maintained a bank account in Mexico.
Petitioner also operated a business activity under the name
of Occidental Utilities (OU). While petitioner entered into at
least one agreement with a client in which petitioner asserted
that OU was a Delaware corporation, petitioner does not recall
incorporating OU, and in any event petitioner conducted business
only as a sole proprietor under that name. In this business
activity, petitioner provided consulting services within the
utilities industry. In 1996 or 1997, petitioner entered into a
contract with a business known as San Luis Tank to provide
consulting services. In connection with this agreement, San Luis
Tank issued petitioner a Form 1099-MISC, Miscellaneous Income,
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