- 13 - Respondent issued petitioner a deficiency notice denying the $10 million partial bad debt deduction for 1995. Petitioner timely filed a petition. OPINION The issue in this case arose in the context of a fast-paced and changing business environment. While the management group made the best business decisions under the circumstances at the time, exigent circumstances beyond the management group’s control caused the management group not to be able to achieve their goals. We are now called upon, more than 10 years later, to decide the tax consequences of these business decisions. The parties stipulated that the parties were not related under the Code and that there was no tax motivation underlying the transaction between Bottlers and Properties. The parties also stipulated that Bottlers had a reasonable expectation that the Properties loan would be repaid. Respondent does not challenge the substance of the transaction. The issue before us, put simply, is whether petitioner is entitled to deduct a portion of the debt, $10 million, because it was partially worthless.3 More broadly speaking, we are asked to 3Petitioner has the burden of proof because the examination commenced before July 22, 1998, the effective date of sec. 7491. See Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3001(c), 112 Stat. 727.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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