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F.K. Wise. The amount included the annual installment payment of
$3,000, due in August 1985, and an additional amount of $3,000.
The interest due at the time of the 1985 installment payment was
$2,773.
On their Federal income tax return for 1985, petitioners
claimed deductions for business bad debts as follows:
Miscellaneous--$1,545; Texaroda--$30,000;5 Wood--$53,919; and
Heger and Wood--$50,000.6
Petitioners delivered their 1985 Federal income tax return
to an individual who came to San Marcos to pick up tax returns
for filing with the Internal Revenue Service (IRS).
OPINION
Issue 1. Bad Debt Deductions
Respondent disallowed all of petitioners' bad debt
deductions claimed on their 1985 Federal income tax return.
Petitioners argue that petitioner was liable as guarantor for
business-related debts of the various oil and gas entities, and
consequently they are entitled to deductions for payments made on
the entities' obligations. Furthermore, petitioners claim that a
business-related debt owed to petitioner became worthless in
1985.
5
On their amended Federal income tax return for 1985,
petitioners reduced this deduction to $15,000.
6
This deduction was claimed on petitioners' amended return.
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