Douglas V. and Magdalene Merante - Page 10

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            extensive, does not constitute a trade or business.  Higgins v.                           
            Commissioner, 312 U.S. 212, 218 (1941).                                                   
                  In the instant case, it is unclear whether petitioner was                           
            engaged in any trade or business in 1989 and 1990.  He was                                
            involved in the activities of Time To Share, but the extent of                            
            those activities is uncertain.  He received no remuneration                               
            whatsoever for his efforts, and we cannot even classify him as an                         
            employee.  Petitioner does not contend, nor does the record                               
            support a finding, that petitioner was in the business of making                          
            loans.  Accordingly, to the extent that the advances are proven                           
            worthless in 1990, we hold that the debts were nonbusiness bad                            
            debts, deductible as short-term capital losses.5                                          
                  A bad debt is deductible only in the year it becomes                                
            worthless.  Denver & R. G. W. R. Co. v. Commissioner, 32 T.C. 43,                         
            56 (1959), affd. 279 F.2d 368 (10th Cir. 1960); Feinstein v.                              
            Commissioner, 24 T.C. 656, 658 (1955).  Petitioner has the burden                         
            of proving that the debt became worthless during the year in                              
            question.  Rule 142(a); Estate of Mann v. United States, 731 F.2d                         
            267, 275 (5th Cir. 1984); James A. Messer Co. v. Commissioner, 57                         

            5           The $2,900 check of Jan. 30, 1990, is not a true loan                         
            or advance.  It was payment for the sale of a car.  The record is                         
            insufficient to allow any deduction on that account.  Moreover,                           
            the amount of loss with regard to the Oct. 9, 1990, promissory                            
            note for $2,869 given for transfer of water filters, etc.,                                
            depends upon petitioner's basis in the transferred assets, which                          
            has not been established herein.  Consequently, no part of the                            
            $2,869 is deductible herein.                                                              

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