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contemporaneous (and subsequent) bookkeeping for the wire
transfer payments represented a further manifestation of that
intent.19
As noted supra (note 7), the amounts of basis attributable
to the wire transfer payments that carried over to 1999 are not
certain. It is certain, however, that those basis amounts are
substantially less than Sidal’s 1999 ordinary loss, thereby
enabling each petitioner to deduct only a small portion of that
loss and none of Sidal’s 2000 ordinary loss. We assume that the
parties will be able to arrive at agreed carryover basis figures
in the Rule 155 computation.
E. Conclusion
The Paulan direct payments did not provide petitioners with
any bases in Sidal under section 1366(d)(1)(B). The wire
transfer payments did provide petitioners with carryover bases in
Sidal under that section sufficient to enable them to deduct a
small portion of Sidal’s 1999 ordinary loss and none of Sidal’s
2000 ordinary loss.
Decisions will be entered
under Rule 155.
19 As in Gilday v. Commissioner, T.C. Memo. 1982-242 n.8,
we regard the payments of principal and interest by Sidal
directly to Paulan rather than to petitioners who, in turn, would
have had to transmit those payments to Paulan, as the permissible
avoidance of “fruitless steps”.
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