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support a finding that petitioner made any investment in
Adrical.3
Even if petitioner had substantiated that he made an
investment in Adrical, in order to claim a worthless security
loss under section 165(g), petitioner also had to establish that
he received a stock interest in Adrical and that the stock became
worthless in 2000.
Petitioner has not presented evidence that establishes that
he was a stockholder in Adrical. At trial, in response to
questions from the Court, petitioner acknowledged that he did not
receive stock certificates in Adrical, that he did not know his
percentage ownership interest in Adrical, that he did not know
whether he was an officer of Adrical, and that in hindsight he
was not sure that he was a stockholder of Adrical.
Further, petitioner repeatedly testified that Garza was
obligated to repay funds petitioner transferred to Garza,
suggesting that any such funds constituted a loan to Garza, not a
stock investment made by Garza on petitioner’s behalf.
3Petitioner cites Jensen v. Commissioner, T.C. Memo. 1993-
393, affd. 72 F.3d 135 (9th Cir. 1995), for the proposition that
petitioner is not required to produce evidence that he owned
stock in Adrical, Inc. Petitioner fails to differentiate between
a theft loss under sec. 165(e), which was the case in Jensen, and
a worthless security loss under sec. 165(g), the latter of which
requires affirmative evidence that the loss resulted from a
security investment.
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