Douglas V. and Magdalene Merante - Page 8

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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                                   
                  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                             
                  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                                
                  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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