The petitioner invested $285,000 into a scrap metal business (C corporation) operated by his brother. The business filed bankruptcy. The petitioner operated a profitable landscaping business. On this joint return, the petitioner included a Schedule C for the landscaping business and another Schedule C showing a loss from the scrap metal business claiming a $359,000 loss for 2008. The loss was reported as “other expenses” on line 27 of the Schedule C. All other lines of the second Schedule C were blank. The loss more than offset the gain from the Schedule C landscaping business. The IRS disallowed the loss and the court agreed. The loss was not a bad debt, a worthless security or a capital loss. The loss did not become worthless in the year at issue, and his brother kept the scrap metal business operational after the tax year in issue. The petitioner’s short-term capital loss was also disallowed that he was initially allowed upon the IRS initially believing that the petitioner had a bad debt. The negligence penalty was not applied. Espaillat v. Comr., T.C. Memo. 2015-202.