Joseph Lorch and Hannah Lorch v. Commissioner of Internal Revenue, Michael T. Harges and Janet G. Harges v. Commissioner of Internal Revenue

LUMBARD, Circuit Judge:

Joseph Lorch and Michael Harges appeal from an order of the Tax Court approving the Commissioner’s assessment of deficiencies in their federal income tax returns for the year 1970. 1 Finding that petitioners were not entitled to certain ordinary losses claimed under IRC § 165(c)(2) on their 1970 returns, we affirm the decision of the Tax Court.

The facts are undisputed. In January of 1962, Lorch and Harges entered into separate agreements with Hayden, Stone & Company, Inc., a brokerage firm, designed to help Hayden Stone meet the minimum capital requirements of the New…