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On his Federal income tax return for taxable year 2000,
petitioner reported a theft loss of $202,830 on his investment in
60,000 shares of Ampex common stock. Petitioner used the closing
price of the stock at the end of 2000 to calculate a theft loss
deduction in the amount of $202,830 (60,000 shares x $0.375 less
a claimed cost basis of $225,330).3
To explain his position for claiming a theft loss deduction
in 2000, petitioner attached to his 2000 return a Form 8275,
Disclosure Statement, and stated that Ampex engaged in “a pattern
of willful and mis-leading disclosures and non-disclosures” that
constitutes theft by fraud or false pretenses against its
shareholders. In particular, petitioner cited that Ampex failed
to timely disclose the dissolution of its joint venture with ISS
and the resulting material lawsuits. Furthermore, petitioner
accused Ampex’s corporate officers of continuing to mislead
investors in May 2000 by making unreasonably rosy revenue
projections at a meeting for institutional investors and by
discussing at a shareholder’s meeting in June 2000 the sale of an
operating subsidiary that subsequently did not occur.
Petitioner filed complaints against Ampex with the U.S.
Securities and Exchange Commission on July 24, 2001, and with the
3 At trial, petitioner stipulated that his cost basis in
the 60,000 shares of Ampex stock is $212,987.50 rather than the
$225,330 that he used on his 2000 return. We consider the
stipulated cost basis as a concession of a portion of
petitioner’s claimed theft loss deduction to $190,487.50 (60,000
shares x $0.375 less a cost basis of $212,987.50).
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