                         T.C. Memo. 2003-94



                      UNITED STATES TAX COURT



                   ERNST L. MEIER, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6048-00.              Filed March 31, 2003.



     Charles J. Hlavinka, for petitioner.

     William F. Castor, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     SWIFT, Judge:   Respondent determined a deficiency in

petitioner’s Federal income tax for 1993 in the amount of

$368,263.
                               - 2 -

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

     After concessions, the issue for decision is whether for

1995 petitioner is entitled to a bad debt deduction in the amount

of $3,207,578.   This issue turns on whether, for purposes of

section 166, certain fund transfers that petitioner made to

Blackland Investment Co., Inc. (Blackland), a corporation that

petitioner appears to have controlled, constituted loans and, if

so, whether such loans became worthless in 1995.    Resolution of

this issue will affect net operating loss carrybacks that

petitioner claims for 1992 and 1993.

     Certain books and records and other information relating to

petitioner, to ownership and operation of Blackland, and to the

transactions at issue herein are not in evidence.   As a result,

aspects of our Findings of Fact are not as specific as they

should be.   Petitioner is largely responsible for the situation

in which we find ourselves, as petitioner himself (and other key

individuals) did not testify at trial.


                         FINDINGS OF FACT

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

     In 2000, at the time the petition was filed, petitioner, a

German national, resided in Italy.
                               - 3 -

     From 1988 through 1995, petitioner’s primary residence was

located in Germany, but petitioner also maintained a rental

residence in Garland, Arkansas.

     Between 1988 and 1993, petitioner and Garland Farms, Inc.

(Garland Farms), another Arkansas corporation that petitioner

established and that petitioner also appears to have controlled,

acquired a number of farm properties located in Arkansas and

Louisiana for the purpose of dividing the properties into smaller

parcels and leasing the properties to farmers (tenant farmers),

which in fact occurred.

     Petitioner was the initial president of Garland Farms.     The

sole direct shareholder of Garland Farms apparently was Bitola

Co. Establishment (Bitola), a Liechtenstein corporation, the

stock ownership in which was not credibly established at trial.

     In July of 1988, Alexander Frick nominally became the

president of Garland Farms, but Frick simultaneously executed a

power of attorney on behalf of Garland Farms authorizing

petitioner to control and operate Garland Farms, under which

power of attorney petitioner also had the power to control the

funds of Garland Farms.   Frick did not testify at the trial.

During the years 1988 through 1996, various employees of Garland

Farms regarded petitioner as the owner and/or general manager of

Garland Farms.
                                 - 4 -

     Trial evidence suggests that the tenant farmers to whom

Garland Farms leased the farm properties represented high credit

risks and could not obtain financing from commercial banks to

finance their farm operations.

     On April 3, 1992, Blackland was incorporated in Arkansas for

the purpose of making loans to the tenant farmers to whom Garland

Farms leased farm properties.

     During 1994, 1995, and 1996, petitioner was secretary of

Blackland, and various employees of Garland Farms were the

nominal shareholders and other officers of Blackland and were

involved, along with petitioner, in the day-to-day operations of

Blackland.   Blackland, however, did not treat any of its

officers, nor anyone else, as employees, and Blackland did not

pay any wages.   Blackland’s balance sheets for December 31, 1992,

through December 31, 1996, reflect that its nominal shareholders

paid a total of $1,000 for their stock in Blackland.

     The record does not reflect that petitioner owned any direct

stock interest in Blackland.    As indicated, however, petitioner

appears to have been in control of Blackland, and petitioner

provided Blackland with most of the funds Blackland needed to

make loans to the tenant farmers.

     In April of 1992, petitioner contends that he, as creditor,

entered into a financing arrangement with Blackland that

constituted a revolving line of credit with Blackland under which
                                - 5 -

petitioner alleges he agreed to loan to Blackland a maximum

principal amount of up to $2 million at an annual interest rate

of 7.5 percent.   Other than general reference in the note

referred to below to a loan from petitioner to Blackland,

petitioner’s purported agreement to extend a multimillion dollar

line of credit to Blackland is not documented in the trial

evidence.    No written loan agreement or line of credit agreement

was executed by petitioner.

     On April 13, 1992, a document entitled “revolving credit

note” was executed only by the nominal president of Blackland in

favor of petitioner under which Blackland purported to agree to

repay to petitioner funds to be extended to Blackland under the

above purported revolving line of credit (revolving credit note).

No schedule for the payment of principal or interest is set forth

in the revolving credit note, other than simply to indicate that

any outstanding principal would be payable on demand no later

than December 31, 1992, and, as indicated, the note makes general

reference to an obligation of petitioner to make a loan to

B1ackland.   Petitioner, however, is not a signatory on the

revolving credit note.

     Petitioner controlled and determined the stated terms of

Blackland’s $2 million revolving credit note.   As stated above,

the note was executed in 1992 by the nominal president of

Blackland at the direction of petitioner.   No negotiations or
                              - 6 -

arm’s-length discussions on behalf of Blackland occurred in

connection with the terms of the $2 million revolving credit

note.

     According to the May 31, 1992, balance sheet and year-to-

date income statement of Blackland that is in the record, at the

time the $2 million revolving credit note was executed on

April 13, 1992, on behalf of Blackland, Blackland had no capital,

no income, and no retained earnings.   No security agreement was

entered into between petitioner and Blackland to provide

collateral in favor of petitioner for any funds petitioner

transferred to Blackland under the revolving line of credit.

     During 1992 and until July of 1993, in spite of the

existence of the April 13, 1992, revolving credit note, no

transfers of funds occurred between petitioner and Blackland.

     Minutes of the meeting of the nominal shareholders of

Blackland held on March 9, 1995, state that the $2 million

revolving credit note was orally renewed for 1993 and 1994.

     On March 10, 1995, another document also entitled “revolving

credit note” was executed by the president of Blackland in favor

of petitioner under which Blackland again purported to agree to

repay to petitioner funds to be extended to Blackland under a

loan from petitioner up to a maximum principal amount of $2.5

million at an annual interest rate of 8 percent.   No schedule for

the payment of principal or interest is set forth in this second
                               - 7 -

purported revolving credit note (revolving credit note), and the

note reflects no maturity date.   The note makes general reference

to an obligation of petitioner to make a loan to Blackland.

Petitioner, however, is not a signatory on this revolving credit

note.

     As was the first, this second revolving credit note was

executed by the president of Blackland at the direction of

petitioner.   No negotiations or arm’s-length discussions on

behalf of Blackland occurred in connection with the terms of the

March 10, 1995, $2.5 million revolving credit note.   Again, no

separate written loan agreement or line of credit agreement to be

associated with this second revolving credit note is found in the

record.

     Beginning in July of 1993, and in 1994 and 1995, petitioner

transferred funds to Blackland in the total cumulative amount of

$3,545,020, and Blackland transferred funds to petitioner in the

total cumulative amount of $724,480.

     Blackland’s monthly balance sheets as of July 31 and

August 31, 1993, reflect the funds received from petitioner in

those 2 months as “shareholder loans”, even though petitioner

claims not to have been a shareholder of Blackland.   Beginning in

September of 1993 and through 1996, the funds transferred by

petitioner to Blackland were classified on Blackland’s monthly

balance sheets as “Note Payable-Moccasin Farms”.
                                     - 8 -

     The nature of Moccasin Farms as a legal entity is not

disclosed in the record.      Petitioner contends, and respondent

apparently does not dispute, that petitioner, Garland Farms, and

Blackland treated Moccasin Farms as an alter ego of petitioner

individually.

     The schedule below reflects the dates and the amount of

funds transferred between petitioner and Blackland in 1993, 1994,

and 1995, as reflected on “worksheets” to which the parties have

stipulated.

                   Amount Transferred By       Amount Transferred By
      Date        Petitioner To Blackland     Blackland To Petitioner

      1993
      7/16             $   300,000
      8/11                  80,000
      8/25                  50,000
      9/10                 730,350
     12/31                                       $ 40,471
          Total-1993   $1,160,350                $ 40,471

      1994
      1/31             $    1,268
      5/11                                       $ 91,579
      5/18                                             25
      5/27                 474,054
      7/01                 300,000                  9,184
      7/28                 202,150
      7/31                                          2,596
      8/10                                          1,399
      8/17                                            576
      8/19                                          2,247
      8/24                                            613
      8/25                 100,000
      9/13                 300,000
      9/14                                            342
      9/19                 100,000
      9/21                                          1,000
     10/05                                            483
     10/12                                          1,601
     11/02                                            170
     11/09                                            245
     11/15                                          4,513
     11/21                    740                 487,117
     12/31                                         19,065
          Total-1994   $1,478,212                $622,755
                                      - 9 -

                        Amount Transferred By     Amount Transferred By
     Date              Petitioner To Blackland   Blackland To Petitioner


      1995
      2/13                                         $     681
      3/14                                             1,253
      4/20                                               630
      5/01                                             2,599
      5/11                                             5,052
      6/01                                               135
      6/07                                             3,365
      6/13                                               360
      6/21                                             9,979
      7/05                                             7,250
      7/10              $   200,000
      7/12                                             12,712
      7/19                  250,000
      7/26                                             1,526
      8/10                                                78
      8/21                  250,000
      8/31                                             4,130
      9/18                   30,000
     10/13                   85,000
     10/31                   50,000                      285
     11/14                   35,000
     12/31                    6,458                  11,219
          Total-1995    $   906,458                $ 61,254

     Total Cumulative $3,545,020                   $724,480


     With respect to the $487,117 transferred by Blackland to

petitioner on November 21, 1994, $159,028 thereof was identified

on the above worksheets as “accrued interest” on funds

transferred by petitioner to Blackland as of that date, which

were the only funds transferred by Blackland to petitioner

between 1993 and 1995 that were identified as interest.

     On March 10, 1995, the president of Blackland and petitioner

signed a “security agreement” wherein Blackland purportedly

granted petitioner a security interest in all of the then-owned

and after-acquired property and assets of Blackland for the

stated purpose of securing the funds transferred by petitioner to
                              - 10 -

Blackland under the terms of the purported $2 and $2.5 million

lines of credit.   There is, however, no evidence in the record of

the filing of a financing statement by petitioner to perfect his

purported security interest in the property and assets of

Blackland with respect to funds he transferred to Blackland.

     Also on March 10, 1995, there was adopted on behalf of

Blackland a resolution to allow petitioner and petitioner’s wife

(who was not an officer or employee of Blackland) access to “any

or all funds” from Blackland’s bank accounts.    The resolution

reflects no limit on the purpose or use for which petitioner and

his wife were authorized to make withdrawals from Blackland’s

bank accounts.

     Between 1992 and 1995, using the funds received from

petitioner, Blackland loaned millions of dollars to the tenant

farmers to whom Garland Farms had leased farm properties.     The

funds loaned to the tenant farmers were used by the farmers to

pay farm operating expenses and living expenses.    On some

occasions, Blackland would directly pay third-party vendors for

expenses of the tenant farmers, and Blackland would add to the

balance of the farmers’ outstanding loans the amounts it had paid

to the third parties on behalf of the farmers.

     Funds loaned by Blackland to the tenant farmers were secured

in favor of Blackland through security interests on the farmers’

crops and crop proceeds, and Blackland’s security interests
                              - 11 -

therein were perfected.   Also, as further security and as a loan

repayment mechanism, the farmers assigned to Blackland their

rights to crop insurance payments and to U.S. Department of

Agriculture price support and production adjustment payments

(hereinafter “Government payments”).

     The Government payments received by Blackland on behalf of

the tenant farmers, as a result of the above assignment, were the

primary source of the funds that were transferred by Blackland to

petitioner.

     By September of 1995, the tenant farmers owed Blackland

approximately $3,250,000.

     In September of 1995, based apparently on projected net

losses for the tenant farmers, petitioner ceased transferring

funds to Blackland except to the extent necessary for Blackland

to finance the current harvest of various farmers’ crops.

     In October of 1995, letters were mailed on behalf of

Blackland notifying suppliers of certain tenant farmers that

Blackland would not pay any more expenses of the tenant farmers

and notifying wholesalers (to whom the farmers sold crops) of the

liens Blackland possessed on the crop sales proceeds.

     As of December 31, 1995, the above-referred-to worksheets

reflecting fund transfers between petitioner and Blackland

reflect a purported total loan balance due from Blackland to
                             - 12 -

petitioner in the amount of $2,979,5681 and interest due to

petitioner as of that date of approximately $227,9902.

     Between December of 1995 and February of 1996, settlement

agreements were entered into between Blackland, Garland Farms,

and a number of the tenant farmers regarding repayment of the

loans that the tenant farmers owed to Blackland.   Under the terms

of the above settlement agreements, crop production costs of

certain farmers were to be paid by Blackland, and in return the

farmers promised to transfer any crop proceeds, crop insurance

payments, and Government payments received first to Garland Farms

in payment of rent on the farm properties and then to Blackland

in repayment of the loans.

     In February of 1996, a number of the tenant farmers who had

past due loans owed to Blackland and who had not yet entered into

settlement agreements with Garland Farms and Blackland filed for

bankruptcy.

     For the first time, on Blackland’s March 31, 1996, balance

sheet (and thereafter on its balance sheets for April and May

1996) there is reflected a “Note Receivable” from petitioner,


1
     $3,545,020 less $565,452 ($724,480 transferred by Blackland
to petitioner less $159,028 of purported interest) equals
$2,979,568.
2
     A “worksheet” of petitioner’s that was stipulated to by the
parties reflects unpaid accrued interest for 1993 through 1995
owed to petitioner by Blackland in the amount of $227,990, or $20
less than the $228,010 interest claimed by petitioner as part of
the bad debt deduction in issue.
                               - 13 -

suggesting that during the month of March 1996, there was

transferred from Blackland to petitioner $600,000.   Any such

transfer apparently would have occurred under the above March 10,

1995, resolution in favor of petitioner and petitioner’s wife

with regard to their control of the funds of Blackland.

     In April of 1996, those tenant farmers who had filed for

bankruptcy entered into settlement agreements with Blackland

under which Blackland agreed to release the tenant farmers from

all liability to Blackland on the farm loans in return for an

assignment from the tenant farmers to Blackland of all rights to

crop proceeds, crop insurance payments, and Government payments.

     The trial record does not disclose the amount of funds that

Blackland and/or petitioner recovered under the above assignments

by the farmers of their crop proceeds, crop insurance payments,

and Government payments.   From April 1, 1996 through December 1,

1996, however, Blackland’s monthly balance sheets reflect that

Blackland received approximately $350,000 in loan repayments from

the tenant farmers.

     Beginning with Blackland’s June 30, 1996, balance sheet,

Blackland’s balance sheets make no further reference to a

$600,000 note receivable obligation due from petitioner to

Blackland, and yet there is no indication that petitioner made

such a payment to Blackland.
                             - 14 -

     Blackland’s monthly balance sheets from January 1, 1996,

through the end of November of 1996, reflect that Blackland’s

stated loan balance owed to petitioner was reduced by $33,293

from $2,979,568 to $2,946,275.   On Blackland’s December 31, 1996,

balance sheet, the stated loan balance owed to petitioner was

indicated as zero.

     The evidence in the record does not reflect that petitioner

ever made a formal demand for repayment from Blackland of the

funds he transferred to Blackland between 1993 and 1995, and

petitioner never attempted to obtain a monetary judgment against

Blackland based on the funds transferred.

     The only accounting books and records of petitioner (as

distinguished from Blackland) relating to the funds he

transferred to Blackland during 1993 through 1995 that are in

evidence in this case consist of the above-mentioned worksheets.

No income statements, balance sheets, general ledgers, journals,

or complete bank account statements of petitioner relating to the

funds he transferred to Blackland are in the record.

     With regard to Blackland’s financial records, the

evidentiary record in this case includes Blackland’s unaudited

monthly and annual income statements and monthly balance sheets

for 1992 through 1996, and general ledger accounts for limited

periods of time.

     Blackland was dissolved on March 28, 1997.
                              - 15 -

     Petitioner’s individual Federal income tax returns for 1992

through 1995 were prepared based on the accrual method of

accounting.

     On April 16, 1996, petitioner filed his individual Federal

income tax return for 1995 on which there was claimed an ordinary

business bad debt deduction in the amount of $3,207,578, based on

the claimed balance due from Blackland as of December 31, 1995,

with respect to the purported loans petitioner had made to

Blackland (computed as $2,979,568 in principal and $228,010 in

accrued interest).   The bad debt deduction claimed by petitioner

for 1995 did not take into account the $600,000 that petitioner

appears to have withdrawn from Blackland in March of 1996, just

days before the filing of petitioner’s 1995 individual Federal

income tax return.

     Due mostly to the above-claimed bad debt deduction,

petitioner’s individual Federal income tax return for 1995

reflected a $3,267,334 net operating loss.

     On October 15, 1996, petitioner filed an amended individual

Federal income tax return for 1992 on which petitioner reflected

a carryback of the above-claimed 1995 net operating loss.3

Petitioner’s amended income tax return for 1992 reflected a



3
     Previously, in 1995, petitioner had filed an amended
individual Federal income tax return for 1992 to carry back a net
operating loss reflected on petitioner’s 1994 individual Federal
income tax return.
                             - 16 -

refund due to petitioner in the amount of $215,353, which

respondent denied.

     Also on October 15, 1996, petitioner filed an amended

individual Federal income tax return for 1993 on which petitioner

claimed a carryback of the balance of the 1995 claimed net

operating loss not used for 1992.4    Petitioner’s 1993 amended

income tax return reflected a refund due petitioner in the amount

of $368,263, which respondent paid.

     None of Blackland’s income tax returns are in evidence.

Blackland did not claim bad debt deductions relating to the loans

Blackland made to the tenant farmers until the filing of

Blackland’s 1996 Federal income tax return, on which a bad debt

deduction in the total amount of $2,872,776 relating thereto was

claimed.

     On audit of petitioner’s 1993 and 1995 individual Federal

income tax returns, respondent disallowed petitioner’s claimed

bad debt deduction for 1995 in the total amount of $3,207,568 and

the related net operating loss carryback and refund claimed for

1993.




4
     Previously, in 1994, petitioner had filed an amended
individual Federal income tax return for 1993 to claim a foreign
currency transaction loss that petitioner had not claimed on his
original 1994 tax return.
                               - 17 -

                               OPINION

     Section 166(a) allows bad debt deductions for loans that

become worthless within a taxable year.   Petitioner bears the

burden of proving that the amounts in question constituted loans

and that such loans became worthless in 1995, the year for which

the deduction is claimed.5   Rule 142(a); Welch v. Helvering, 290

U.S. 111, 115 (1933).

     Under section 1.166-1(c), Income Tax Regs., bad debt

deductions are limited to bona fide loans that arise from genuine

debtor-creditor relationships and that are based on valid and

enforceable obligations to pay fixed or determinable sums of

money.   A gift or a contribution to capital does not constitute a

valid loan for purposes of section 166.    In re Uneco, Inc., 532

F.2d 1204, 1207 (8th Cir. 1976); sec. 1.166-1(c), Income Tax

Regs.

     Necessary to the existence of a debtor-creditor relationship

is a finding that the taxpayer-creditor had a reasonable

expectation of repayment.    Fisher v. Commissioner, 54 T.C. 905,

909-910 (1970).

     Generally, courts analyze whether the requisite intent

existed to repay funds transferred by a taxpayer to another



5
     Because the examination of petitioner’s individual Federal
income tax return for 1995 commenced before July 23, 1998,
sec. 7491 (relating to a possible shift of the burden of proof)
is inapplicable.
                              - 18 -

individual or entity by examining objective evidence of the

taxpayer’s intentions.   See, e.g., In re Uneco, Inc., supra at

1207-1208.   Subjective evidence of the taxpayer’s intent will

also be considered.   Id. at 1209.

     The following factors, among others, are often considered:

(1) Whether a purported loan was evidenced by a written

promissory note; (2) whether interest was charged; (3) whether a

schedule for repayment and a stated maturity date were

established; (4) whether security or collateral for the purported

loan existed (and was perfected); (5) whether the purported

debtor corporation was thinly or inadequately capitalized;

(6) whether the proportion of the corporation’s debt to equity

would justify the purported loan; (7) whether repayment of the

purported loan was predicated on the success of the purported

debtor’s business; (8) whether the purported debtor had the

ability to obtain a similar loan from a bank; (9) whether the

purported creditor participated in the management of the

corporation; and (10) whether the purported loan was repaid by

the stated maturity date.   Id. at 1207-1208; Clark v.

Commissioner, 18 T.C. 780, 783 (1952), affd. per curiam 205 F.2d

353 (2d Cir. 1953).

     The failure of parties to produce evidence in their

possession and control may give rise to a negative inference

that, if produced, the evidence would be unfavorable to them.
                             - 19 -

McKay v. Commissioner, 89 T.C. 1063, 1069 (1987), affd. 886 F.2d

1237 (9th Cir. 1989); Wichita Terminal Elevator Co. v.

Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162 F.2d 513 (10th

Cir. 1947).

     Petitioner argues that he reasonably expected repayment of

the full $3,545,020 he transferred to Blackland between 1993 and

1995, plus interest, that the funds were transferred by him to

Blackland based on a valid debtor-creditor relationship and on an

enforceable debt obligation of Blackland, that the loans to

Blackland became worthless in 1995, and, therefore, that he

should be entitled to the $3,207,578 claimed bad debt deduction

for 1995.

     Respondent argues that petitioner has neither proved that

the funds petitioner transferred to Blackland between 1993 and

1995 represented valid loans nor that the purported loans became

worthless by December 31, 1995.

     At the outset, we emphasize that the funds Blackland

transferred to the tenant farmers are not in dispute.    Respondent

has not challenged the loan characterization thereof.    At issue

are only the funds petitioner transferred to Blackland.   With

regard thereto, we agree with both of respondent’s arguments.

The credible evidence before us is inadequate to establish that

the funds petitioner transferred to Blackland constituted valid
                               - 20 -

and enforceable debt obligations and that the purported loans

became worthless by December 31, 1995.

     No written loan agreement or written line of credit

agreement was signed by petitioner.     The two documents entitled

“revolving credit notes” were not negotiated on behalf of

Blackland.   Rather, they were executed on behalf of Blackland at

the direction of petitioner.   They provided no repayment

schedule, and one of the two notes provided no maturity date.

Petitioner never made a formal demand for repayment of the funds

he transferred to Blackland.

     Not until 1995 did petitioner enter into a security

agreement with Blackland with regard to the approximate $1.5

million transferred to Blackland prior thereto, and there is no

evidence in the record that such security interest was ever

perfected.

     Blackland initially recorded funds received from petitioner

as “shareholder loans”, even though petitioner claims never to

have been a shareholder of Blackland.    As we have found, however,

regardless of the employees of Garland Farms who were named as

nominal shareholders of Blackland, petitioner controlled

Blackland.   The evidence does not establish that the funds

petitioner transferred to Blackland constituted loans.     Rather,

the funds appear to constitute transfers by petitioner to

Blackland of equity capital.
                                - 21 -

     General ledgers and income tax returns of Blackland for the

relevant years are not in evidence, which would reflect the

ledger and tax return treatment by Blackland of the funds

received from petitioner and the details of Blackland’s March

1996 $600,000 transaction with petitioner.

     Petitioner, who has the burden of proof, has failed to

establish that a genuine debtor-creditor relationship existed

between Blackland and himself with regard to the funds in

question and that the purported loans constituted valid debt.

     Further, and in the alternative, we conclude that the

evidence does not establish that the purported loans to Blackland

became worthless by the end of 1995, the year for which the bad

debt deduction is claimed.

     As late as December 31, 1995, petitioner continued to

transfer funds to Blackland, and in 1996 Blackland continued to

transfer funds to petitioner.

     In December of 1995, Blackland had just begun settlement

negotiations with the tenant farmers which negotiations were not

completed until April of 1996.    Blackland itself did not claim a

bad debt deduction with regard to the loans it made to the tenant

farmers until its 1996 Federal income tax return was filed.     Had

Blackland in 1996 recovered more funds from the farmers, those

funds would have been available to transfer additional funds back
                              - 22 -

to petitioner and reduce the claimed loan balance owed to

petitioner.

     As previously mentioned, petitioner and Frick failed to

testify at trial, leaving unanswered significant questions

regarding their relationship to Blackland and Garland Farms and

the nature of the transactions in question.   Under Wichita

Terminal Elevator Co. v. Commissioner, supra, we infer that

petitioner’s testimony, if in evidence, would not have supported

the loan characterization of the funds in dispute nor the claimed

1995 worthlessness thereof.   Petitioner is not entitled to the

claimed $3,207,578 bad debt deduction for 1995 and the claimed

net operating loss carrybacks relating thereto are not allowable.

     All other issues in this case were either expressly conceded

by petitioner or, due to abandonment at trial and on posttrial

briefs, are deemed conceded by petitioner.    See, e.g., Burbage v.

Commissioner, 82 T.C. 546, 547 (1984), affd. 774 F.2d 644 (4th

Cir. 1985); Zimmerman v. Commissioner, 67 T.C. 94, 105 (1976);

Hunt v. Commissioner, 22 T.C. 228, 229 (1954).

     To reflect the foregoing,

                                                  Decision will be

                                          entered under Rule 155.
