Continental Illinois Corp. v. Commissioner
United States Tax Court
Petitioner, a calendar-year taxpayer, had property expropriated by the government of Iran in 1979. Held, even though petitioner retained Iranian deposit accounts, it had no legal right to offset its expropriation claims against such accounts, any practical possibility of setoff was no more than a bargaining chip which did not give rise to a reasonable prospect of recovery as of Dec. 31, 1979, and this case is otherwise controlled by Halliburton Co. v. Commissioner, 93 T.C.…
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Petitioner, a calendar-year taxpayer, had property expropriated by the government of Iran in 1979. Held, even though petitioner retained Iranian deposit accounts, it had no legal right to offset its expropriation claims against such accounts, any practical possibility of setoff was no more than a bargaining chip which did not give rise to a reasonable prospect of recovery as of Dec. 31, 1979, and this case is otherwise controlled by Halliburton Co. v. Commissioner, 93 T.C. 758 (1989), so that petitioner was entitled to a deduction for losses sustained during the taxable year.
1Opinion of the Court
TANNENWALD, Judge:
Respondent determined the following deficiencies in petitioner’s Federal income taxes:
Year Deficiency
1975 . $1,899,880
1976 . 84,088
1977 . 36,741,206
1978 . 15,844,349
1979 . 3,896,519
By order dated April 12, 1989, the “Iranian Loss” issue was severed from the other issues in the case and is the subject of this opinion. The issues for decision are whether petitioner is entitled to deduct losses in 1979 pursuant to section 1651 for the expropriation of stock by the Iranian government in 1979, or alternatively as worthless securities under section 165(g), both of which issues…
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