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Subsequently, Sheldon became difficult to contact. He
avoided telephone calls from petitioner and apparently moved from
the Orange County area to San Luis Obispo. Time To Share was
virtually out of business, and, allegedly, Glen Ivy was having
difficulties itself, while owing Time To Share a substantial sum
of money. Sometime in 1991 or 1992, Glen Ivy filed for
bankruptcy.
Petitioner received a letter dated December 15, 1990, signed
by Sheldon as president of Time To Share, stating that Time To
Share was unable to pay the $32,722. The letter provides, in
part:
Your many inquiries regarding the payment of the note signed
by Time To Share dated October 19, 1990, have made it
necessary for me to contact you at this time to let you know
that we have no monies with which to fulfill this obligation
to you and Maggie.
I am truly sorry for this situation and realize that this is
a great deal of money for you to lose but we simply do not
have the funds to make even a small payment possible. The
way it appears now, we will probably have to close the
company and the loans that you have made to Time To Share
will not be repaid.
As of the end of 1990, Sheldon had no assets and was
insolvent.
Full deductibility from ordinary income is allowed for the
worthlessness of business bad debts, whereas worthless
nonbusiness bad debts are accorded short term capital loss
treatment. Sec. 166(a) and (d). We find that petitioner's
advances to Sheldon were nonbusiness debts. We do not agree with
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