- 9 -
was payable together with interest no later than June 17, 1996.
Kirshner Content defaulted on the promissory note.10
In a confidential business plan dated July 1996, Kirshner
Content proposed the issuance of stock in a public offering for
at least $25 million. As the managing director of Equisource,
petitioner was named as a member of the support team
participating in the organization and financing of Kirshner
Content.
On or about March 7, 1997, C&C Partners filed suit in Texas
against petitioner and Thurmond for payment of the $279,440
promissory note due to Kirshner Content’s default. Petitioner
and Thurmond retained the law firm Baker & Botts, L.L.P., in
Houston to represent them in the ensuing litigation.11
As previously stated on the Schedule C that petitioner
submitted with respect to Kirshner Content, petitioner reported
zero gross income for the activity and claimed deductions for
various expenses related to the activity: (1) A bad debt in the
amount of $7,118; (2) legal and professional fees in the amount
10 On or about Sept. 18, 1996, C&C Partners, LLC, filed suit
in New York State court against petitioner, Thurmond, and Licht,
the three guarantors, and, a month later, the case was removed to
Federal District Court. With respect to petitioner and Thurmond,
the case was removed to Texas. The case against Licht in New
York continued. In that court proceeding, judgment was entered
in favor of C&C Partners, LLC, in November 1997.
11 The record is not clear with respect to the ultimate
resolution of the Texas case involving petitioner and Thurmond.
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