- 41 -
existence at the time of trial, with Mr. Ciotti rather than Mr.
Rendall at the helm, indicates that, as late as April 2005, there
was still some hope for Solv-Ex’s financial success.
We find that petitioners have failed to present credible
evidence in support of their argument that the plan of
reorganization reflected nothing more than the “incorrigible and
hopeless optimism of * * * John Rendall.”16
C. Conclusion
None of the factors petitioners cite is sufficient, either
alone or in combination, to establish (i.e., provide credible
evidence of) the worthlessness of the $2 million loan as of
December 31, 1997. Nor do we see any other basis for a finding
of worthlessness. The sale by Merrill Lynch, as pledgee, of
634,100 shares of Solv-Ex common stock, the delisting of the
stock from trading on the NASDAQ Small-Cap Market (events which
depressed the stock’s value, making it more difficult to raise
capital through the issuance of new shares), the class action
lawsuits, and Solv-Ex’s SEC problems all may have combined to
place Solv-Ex under extreme financial stress, but those events
could not be viewed, on December 31, 1997, as necessarily
eliminating, for all time, Solv-Ex’s ability to discharge at
16 See United States v. S.S. White Dental Manufacturing
Co., 274 U.S. 398, 403 (1927) (in sustaining a loss deduction,
the Supreme Court stated that “[t]he taxing act does not require
the taxpayer to be an incorrigible optimist”).
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011