                          T.C. Memo. 1998-239



                        UNITED STATES TAX COURT



                    SARUNAS ABRAITIS, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 25922-96.               Filed July 2, 1998.



        Sarunas Abraitis, pro se.

        John A. Freeman, for respondent.



                          MEMORANDUM OPINION


        DINAN, Special Trial Judge:   This case was heard pursuant

to the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.1

        1
          Unless otherwise indicated, all section references are
to the Internal Revenue Code in effect for the taxable year in
issue. All Rule references are to the Tax Court Rules of
Practice and Procedure.
                               - 2 -

     Respondent determined a deficiency in petitioner's Federal

income tax for 1993 in the amount of $1,055 and an accuracy-

related penalty pursuant to section 6662(a) in the amount of

$211.

     After concessions by respondent,2 the issue remaining for

decision is whether petitioner is entitled to a credit or refund

for an overpayment of his 1993 Federal income tax.

     Some of the facts have been stipulated and are so found.

The stipulations of fact and attached exhibits are incorporated

herein by this reference.   Petitioner resided in Cleveland, Ohio,

on the date the petition was filed in this case.   Petitioner

resided in Spring, Texas, on the date his amended petition was

filed.

     On March 30, 1993, and April 16, 1993, petitioner made two

payments in the amount of $12,500 each to American Wireless

Systems, Inc. (AWS), which was promoting investments in the

emerging wireless cable television industry.   The $25,000 was

used to purchase, on petitioner's behalf, four units in a

partnership called Wireless Cable TV Associates #38 (WCTVA).

Petitioner thereby became a general partner in WCTVA.




     2
          Respondent concedes all of the adjustments determined
in the statutory notice of deficiency. In addition, the section
6662(a) accuracy-related penalty is not applicable because
respondent's concessions eliminate any underpayment of tax for
petitioner's 1993 taxable year.
                                - 3 -

     On September 29, 1993, petitioner wrote a letter to AWS

requesting that his four units in WCTVA be redeemed for the

amount of his original investment, $25,000, plus 10-percent

interest.    He again requested a return of his investment in a

letter to AWS dated October 10, 1993.    He received no response to

these two letters.    On October 14, 1993, petitioner tried to

telephone AWS but was only able to reach its answering service.

Since October 1993, petitioner has made numerous attempts to

contact AWS and has sought the assistance of several government

agencies and courts in his effort to recover his investment.

     Petitioner did not claim a loss with respect to his

investment with AWS on his 1993 return.    He first considered

claiming a loss at the suggestion of one of respondent's revenue

agents during an audit of his 1993 return.

     Section 165(a) allows as a deduction any loss sustained

during the taxable year and not compensated for by insurance or

otherwise.    In the case of an individual, the deduction is

allowable for losses incurred in any transaction entered into for

profit.   Sec. 165(c)(2).

     Respondent argues that any loss that petitioner incurred

with respect to his investment with AWS was not sustained during

his 1993 taxable year.    With respect to the proper year to claim

a deduction for a loss, section 1.165-1(d), Income Tax Regs.,

provides:
                                - 4 -

          (d) Year of deduction.--(1) A loss shall be
     allowed as a deduction under section 165(a) only for
     the taxable year in which the loss is sustained. For
     this purpose, a loss shall be treated as sustained
     during the taxable year in which the loss occurs as
     evidenced by closed and completed transactions and as
     fixed by identifiable events occurring in such taxable
     year. * * *

                 (2)(i) If a casualty or other event
            occurs which may result in a loss and, in the
            year of such casualty or event, there exists
            a claim for reimbursement with respect to
            which there is a reasonable prospect of
            recovery, no portion of the loss with respect
            to which reimbursement may be received is
            sustained, for purposes of section 165, until
            it can be ascertained with reasonable
            certainty whether or not such reimbursement
            will be received. Whether a reasonable
            prospect of recovery exists with respect to a
            claim for reimbursement of a loss is a
            question of fact to be determined upon an
            examination of all facts and circumstances.
            Whether or not such reimbursement will be
            received may be ascertained with reasonable
            certainty, for example, by a settlement of
            the claim, by an adjudication of the claim,
            or by an abandonment of the claim. When a
            taxpayer claims that the taxable year in
            which a loss is sustained is fixed by his
            abandonment of the claim for reimbursement,
            he must be able to produce objective evidence
            of his having abandoned the claim, such as
            the execution of a release.

     Based on the record, we find that petitioner's loss from his

investment with AWS was not sustained during his 1993 taxable

year.    A copy of AWS's income tax return for its taxable year

ended December 31, 1994, shows that AWS was still operating in

1994 and possessed assets sufficient to satisfy petitioner's

claim.    Moreover, petitioner clearly had not abandoned his claim

as of December 31, 1993, because he testified that he actively
                                 - 5 -

sought to recover his investment well beyond such date.         We

conclude that petitioner's loss from his investment with AWS was

not fixed with reasonable certainty by the end of his 1993

taxable year.   Accordingly, we hold that he is not entitled to a

deduction for any such loss for 1993 and thus did not make an

overpayment of tax.

     To reflect the foregoing,


                                              Decision will be entered

                                         for petitioner as to the

                                         deficiency and the penalty and

                                         for respondent as to the

                                         claimed overpayment.
