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worthlessness); see also Ginsburg v. Commissioner, T.C. Memo.
1974-191 (stock’s worthlessness rejected when based upon an SEC
ban on the trading of the stock in the United States and the
absence of any market for the stock).
Ginsburg indicates that, even if Mr. Rendall had been
subject to SEC restrictions on selling his Solv-Ex common stock
as of December 31, 1997, that fact would not constitute
conclusive evidence of worthlessness. We agree, because a
contrary result ignores the potential marketability of the stock
after December 31, 1997. Assuming arguendo that the delinquent
Forms 10-K and 10-Q and/or his insider status made it impossible
for Mr. Rendall to sell his Solv-Ex shares as of December 31,
1997, it appeared probable at that time that Solv-Ex would be
able to overcome those infirmities after 1997. In fact, the
amended disclosure statement specifically represents that “[t]he
Company intends to file and expects that it will be able to file
* * * [the delinquent] reports, or reports becoming due in the
near future * * * following confirmation of the plan and
completion of an audit.”
Almost from its inception, Solv-Ex constituted a
“development stage enterprise” within the meaning of FAS 7; i.e.,
a company that had not yet commenced its planned principal
operations. Yet, despite a more than 15-year absence of sales or
profits, Solv-Ex common stock was trading at $16.25 a share on
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