ORDER

G. KENDALL SHARP, Senior District Judge

THIS CAUSE comes before the Court upon Defendant's motion to dismiss and motion for summary judgment (Doc. 19) to which Plaintiffs have responded in opposition (Doc. 30), and Plaintiffs' counter-motion for summary judgment (Doc. 30).

I. BACKGROUND

Taxpayers Richard and Margie Wagner ("Plaintiffs"), appearing pro se, filed suit against the United States of America ("Defendant") seeking the refund and abatement of federal income taxes for the taxable years 1991, 1994, and 1995. (Doc. 1.)

The following facts have been stipulated by the parties. Plaintiffs were shareholders in Resource Technology Associates ("RTA"), an S corporation created to invest in new technology for the safe and efficient disposal of tires. (Doc. 38 at 24.) In 1989, RTA entered into an agreement with Environmental Disposal Systems, Inc. ("EDS"), whereby EDS was to construct a Tire Transformation System ("TTS") for RTA for $2.5 million. In 1990, disputes arose between RTA and EDS and construction came to a halt. RTA sued EDS for breach of contract and voted to cease its business operations in 1991. EDS subsequently contracted to sell the TTS for $3 million to Asset Holdings Company, now known as Tire Recyclers, Inc. ("TRI").

In 1992, RTA and EDS entered into a settlement agreement. EDS agreed to pay RTA $2.1 million: half upon completion of the contract between EDS and TRI, and the remainder from proceeds of future transactions by EDS. As of December 1994, EDS had not paid RTA pursuant to the agreement because the TTS was never completed. Plaintiffs, as shareholders in RTA, allege they are entitled to deduct the loss they sustained when the corporation dissolved.

II. LAW A. Motion for Summary Judgment

Defendant moves for summary judgment as to Count I. Fed.R.Civ.P. 56(c) states the standard to be applied in summary judgment motions: "The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Summary judgment "may be entered only where there is no genuine issue of material fact." City of Delray Beach v. Agric. Ins. Co., 85 F.3d 1527, 1529 (11th Cir. 1996). A material fact is one that might affect the outcome of the suit under governing law. Mulhall v. Advance Sec., Inc., 19 F.3d 586 (11th Cir. 1994). A dispute over a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The moving party bears the initial burden to show that no genuine issue of material fact remains for trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The movant satisfies its burden when it demonstrates that the "facts underlying all the relevant legal questions raised by the pleadings or otherwise are not in dispute." Delray Beach, 85 F.3d ati 530. The burden then shifts to the nonmoving party to go beyond the pleadings and set forth specific facts showing that there is a genuine issue for trial. Celotex, 477 U.S. at 324. The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); it must present affirmative evidence in order to defeat a properly supported motion for summary judgment." Anderson, 477 U.S. at 257.

A district court, in applying this standard, should view the evidence and its factual inferences in the light most favorable to the nonmoving party. Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970). Any reasonable doubt about the facts should be resolved in favor of the non-movant. Delray Beach, 85 F.3d at 1530. However, the court must avoid weighing conflicting evidence or making credibility determinations. "If the record presents factual issues, the court must not decide them; it must deny the motion and proceed to trial." Id.

B. Motion to Dismiss

Defendant moves to dismiss Counts II and III of Plaintiffs' complaint for lack of subject matter jurisdiction. Pursuant to Fed.R.Civ.P. 12(b)(1), a party may move to dismiss a complaint for lack of subject matter jurisdiction at any time during the course of the action. The party invoking jurisdiction bears the burden of supporting the allegations of jurisdictional facts in the complaint with sufficient proof. Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994). If the court lacks jurisdiction over the subject matter of an action, the action must be dismissed. Fed.R.Civ.P. 12(h)(3).

III. APPLICATION A. Count I — 1994

In Count I, Plaintiffs seek a refund of $8,009.00 plus statutory interest for the 1994 tax year. Because S corporations pass deductions through to their shareholders, Plaintiffs sought to deduct their pro rata share of the loss on their 1991 tax return due to RTA's decision to cease operations. The IRS disallowed the 1991 deduction as premature because there was insufficient evidence of a loss. Plaintiffs now seek to deduct the loss on their 1994 return (to be carried back to the 1991 tax year) due to RTA's dissolution.

Under 26 U.S.C. § 165(a), "[t]here shall be allowed as a deduction any loss sustained during the taxable year and not compensated for by insurance or otherwise." To allow such a deduction under section 165(a), the loss must be evidenced by "closed and completed transactions" and "fixed by identifiable events" actually sustained during the taxable year. Treas. Reg. § 1.165-1(d)(1). If, however, there is a claim for reimbursement with respect to which there is a reasonable possibility of recovery, "no portion of the loss with respect to which reimbursement may be received is sustained . . . until it can be ascertained with reasonable certainty whether or not such reimbursement will be received." Treas. Reg. § 1.165-1(d)(2)(i). The existence of such a possibility of recovery "is a question of fact to be determined upon an examination of all facts and circumstances." Id. The burden of proving that fact is upon the Plaintiffs.

Defendant argues, and the Court agrees, that Plaintiffs have not satisfied their burden and are therefore not entitled to claim the loss in 1994. Defendant contends that because the Tire Transformation System had a chance of operating successfully into 1997, Plaintiffs had a substantial possibility of recovery in the 1994 tax year. According to Treas. Reg. § 1.165-1(d)(2)(i), Plaintiffs must prove that it could have been ascertained with reasonable certainty as of December 31, 1994, that the loss would never be recovered. Jeppsen v. Comm'r, 128 F.3d 1410, 1418 (10th Cir. 1997). In other words, if Plaintiffs' prospect of recovery "was simply unknowable," Plaintiffs would not be entitled to the deduction in 1994. Id.

Plaintiffs argue that determination as to the proper year of loss is a factual question not yet established by the record. The record, however, contains substantial evidence which clearly establishes that 1994 is not the proper year to claim the loss. The record shows (and the parties have stipulated) that EDS and TRI continued to develop the TTS subsequent to RTA's dissolution. John McDilda, the TTS patent designer and EDS Chairman of the Board, oversaw the construction of the TTS. McDilda stated in his deposition that the plant was completed in 1995. At that time, he believed the plant would be successful and, in turn, RTA would make money. (Doc. 19, Ex. B at 44-45.) Charles White, Executive Vice President and board member of TRI, helped construct the TTS and oversaw its day-to-day operations. White stated in his deposition that after McDilda was dismissed in 1995, TRI continued to invest a considerable amount of money in the plant through 1997. (Doc. 19, Ex. C at 57.) He also stated that if the plant would have been successful, TRI would have paid EDS $3 million pursuant to their purchase agreement. EDS would have then been liable to RTA under the settlement agreement and RTA would have recouped its loss.

Plaintiffs did not believe there was a chance for recovery. They claim EDS was in a "shaky financial position" in 1991 and that a "judgment against EDS would be unenforceable." (Doc. 30 at 16.) However, Plaintiffs admitted they never considered pursuing a collection action against EDS because they "thought" EDS was judgment proof. (Doc. 19, Ex. A at 127.) Although Plaintiffs' subjective belief as to whether there was a reasonable prospect of recovery is a factor to consider, the standard to be applied is an objective one. Boehm v. Comm'r, 326 U.S. 287, 292-93 (1945) ("A determination of whether a loss was in fact sustained in a particular year cannot fairly be made by confining the trier of facts to an examination of the taxpayer's beliefs and actions"); Jeppsen, 128 F.3d at 1418. Plaintiffs failed to provide any objective evidence to demonstrate that EDS' financial condition was such that actual recovery could not reasonably be expected. Therefore, Plaintiffs failed to prove there was no realistic possibility of an actual recovery in 1994.

Plaintiffs argue, as an alternative, that they are entitled to claim a worthless stock deduction in 1994 under 26 U.S.C. § 165(g). (Doc. 1, ¶ 18.) "The question of whether a stock becomes worthless during a particular year is strictly a question of fact, and the [Court] is entitled to draw reasonable inferences and conclusions." Genecov v. United States, 412 F.2d 556, 560 (5th Cir. 1969). Again, Plaintiffs' subjective belief as to the worthlessness of RTA's stock is insufficient. Boehm, 326 U.S. at 293. Plaintiffs must demonstrate "closed and completed transactions, fixed by identifiable events," to prove that the stock had no value in 1994. Treas. Reg. § 1.165-1(b).

Plaintiffs contend that 1994 was the year in which RTA dissolved and therefore the stock was of no further value. Stock, however, does not become worthless until the "last vestige of value has disappeared." Genecov, 412 F.2d at 560-61. "As long as the stock has any value, either present or potential, the taxpayer may not claim a deduction on account of its value shrinkage." Miami Beach Bay Shore Co. v. Comm'r, 136 F.2d 408, 409 (5th Cir. 1943). Plaintiffs claim the stock "had virtually no value to the shareholders or to outsiders, other than those who would only be interested in purchasing it for speculative value." (Doc. 30 at 17) (emphasis added). In 1993, however, RTA and EDS executed an addendum to their settlement agreement. The addendum granted RTA the option to purchase all products and services of EDS at the lowest prices offered as well as marketing rights in the TTS technology. (Doc. 38 at 28.) The stock therefore had value as long as EDS continued to develop the TTS.

Based on an examination of all the facts and circumstances, a viable claim for reimbursement existed as of the close of 1994, and there was a reasonable prospect that Plaintiffs would recover their loss. Treas. Reg. § 1.165-1(d)(2)(i) provides "[w]hether or not such reimbursement will be received may be ascertained with reasonable certainty, for example, by a settlement of the claim. . . ." (emphasis added). Plaintiffs had a reasonable prospect of recovery from the time the settlement agreement was reached in 1992, until all attempts to make the TTS fully operational stopped in 1997. It could not be ascertained with reasonable certainty that reimbursement would never be obtained until that time. For this reason, Plaintiffs did not sustain a loss in 1994. Defendant's motion for summary judgment as to Count I is therefore granted.

B. Count II — 1991

In Count II, Plaintiffs seek an abatement of tax in the amount of $236,376.00, a refund of any amount paid, and abatement of penalties assessed for the 1991 tax year. Defendant moves to dismiss Count II for lack of subject matter jurisdiction based on Plaintiffs' failure to comply with 28 U.S.C. § 1346(a).

Section 1346(a) requires full payment of a tax assessment before an income tax refund suit can be maintained in a federal court. Flora v. United States, 362 U.S. 145, 177 (1960). Plaintiffs have not alleged they made full payment of their tax assessment for 1991. In fact, Plaintiff Richard Wagner acknowledged in his deposition that they have not fully paid the tax assessment. (Doc. 19, Ex. A at 131-32.) Furthermore, Plaintiffs stipulated that the amount assessed against them for 1991 "remains largely unpaid." (Doc. 38 at 29.) This Court therefore lacks subject matter jurisdiction as to Count II and Defendant's motion to dismiss Count II is granted.

C. Count III — 1995

In Count III, Plaintiffs seek a refund of $3,328.00 plus statutory interest for the 1995 tax year. Plaintiffs contend that if 1994 is not the proper year to claim the loss, then 1995 is the "next most logical and appropriate year." (Doc. 1, ¶ 30.) Defendant moves to dismiss Count III for lack of subject matter jurisdiction based on Plaintiffs' failure to comply with 26 U.S.C. § 7422(a) and Treas. Reg. § 301.6402-2(b)(1).

Under section 7422(a), "[n]o suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax . . . until a claim for refund or credit has been duly filed" with the government. Charter Co. v. United States, 971 F.2d 1576, 1579 (11th Cir. 1992). Under Treas. Reg. § 301.6402-2(b)(1), such a claim "must set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof." It must also set forth "the amount determined as an overpayment and . . . whether such amount shall be refunded to the taxpayer." Treas. Reg. § 301.6402-3(a)(5).

Defendant argues that Plaintiffs' 1995 refund claim, filed September 1999, was invalid because it failed to set forth grounds upon which the refund was claimed and facts sufficient to apprise the IRS of its exact basis. Defendant states that Plaintiffs' Form 1040X was incomplete in that it did not list an amount to be refunded. See United States v. Felt Tarrant Mfg. Co., 283 U.S. 269, 272 (1931) (section 7422(a) "is not satisfied by the filing of a paper which gives no notice of the amount or nature of the claim for which the suit is brought, and refers to no facts upon which it may be founded"). Defendant further states Plaintiffs' claim made no reference to the theories of recovery pleaded in the complaint. See Charter Co. v. United States, 971 F.2d 1576, 1579 (11th Cir. 1992) (litigation of the government's denial of a refund claim is limited to the grounds contained within plaintiffs refund claim); Campbell Sons Oil Co. v. United States, No. CV-94-U-2461-NE, 1995 WL 691892, at *2 (N.D. Ala. Sept. 8, 1995) ("the plaintiff must do more than allude to a possible theory of recovery in the refund claim").

Plaintiffs, on the other hand, argue that their 1995 refund claim was valid because it sufficiently stated grounds for a refund. They further maintain it was filed as a protective claim to keep the statute of limitations open and therefore did not generate a refund. (Doc. 30 at 2.) Plaintiffs assert the claim specifically referenced RTA's insolvency and thus the Commissioner "was fully apprised of the basis and nature of the claim." ( Id. at 7.) The Court finds, however, that Plaintiffs' explanation on the 1995 refund claim did not meet the requirements of Treas. Reg. § 301.6402-2(b)(1) and was therefore insufficient to allow the Commissioner to effectively address the merits.

Plaintiffs' failure to satisfy the specificity requirements in 26 U.S.C. § 7422(a) and Treas. Reg. § 301.6402-2(b)(1) constitute an invalid claim for refund and thus deprive the Court of jurisdiction. Furthermore, the amount Plaintiffs seek, $3,328.00 plus interest, was already refunded to Plaintiffs in February 1997. (Doc. 19, Ex. D.) Defendant's motion to dismiss Count III for lack of subject matter jurisdiction is therefore granted. The Court notes that even if Plaintiffs had complied with the jurisdictional requirements, Plaintiffs would not be entitled to deduct the loss in 1995 for the same reason they cannot deduct the loss in 1994 — a reasonable prospect of recovery existed.

IV. CONCLUSION

Having determined no genuine issue of material fact remains to be tried and that Defendant is entitled to judgment as a matter of law, Defendant's motion for summary judgment as to Count I is GRANTED. Accordingly, Plaintiffs' counter-motion for summary judgment is DENIED.

Furthermore, Defendant's motion to dismiss Counts II and III of Plaintiffs' complaint for lack of subject matter jurisdiction is GRANTED. Plaintiffs' complaint is therefore DISMISSED. The Clerk is hereby directed to close the case and enter judgment for the Defendant as to Count I.

DONE AND ORDERED