-3-
taxable years, respectively). Respondent reflected these
determinations in notices of deficiency issued on December 17,
2002, and April 9, 2003, to HEI and its subsidiaries. Hubert
Holding Co. (HHC), HEI’s successor as parent of its affiliated
group, petitioned the Court in docket No. 16798-03 to redetermine
respondent’s determination of Federal income tax deficiencies of
$1,437,240 and $1,093,008 in its taxable years ended July 29,
2000, and July 28, 2001, respectively (HHC’s 2000 and 2001
taxable years, respectively). Respondent reflected this
determination in a notice of deficiency issued to HHC on June 30,
2003.
Following concessions by petitioners, we must decide the
following issues:
1. For HEI’s 1997 taxable year, whether HEI may deduct as
either a bad debt or as a loss of capital (equity) $2,397,266.32
of unrecovered funds that it transferred to Arbor Lake of
Sarasota Limited Liability Co. (ALSL), a limited liability
company of which HEI was not an owner but which was owned
primarily and controlled by a few individuals who also controlled
HEI. We hold HEI may not deduct the funds as either a bad debt
or a loss of capital; and
2. for HHC’s 2000 and 2001 taxable years, whether HHC may
deduct passthrough losses from leasing activities relating to
equipment placed in service in different taxable years. As an
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011