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The only evidence in the record pertaining to this debt is a
promissory note in the amount of $20,000. Texas Commerce Bank is
the payee, and John Heger and petitioner signed as makers of the
note. Wise Co. is not listed as maker, nor is it referred to on
the note. Accordingly, the loan transaction appears to be one in
which petitioner is the primary obligor. Furthermore, petitioner
has not presented any evidence, other than his uncorroborated
testimony, that any payment was made on the note. Accordingly,
we sustain respondent's disallowance.
Texaroda Deduction--$15,000
Petitioner asserts that the transfer of funds from Weimar
Bank to the National Bank of Commerce satisfied a debt owed by
Wood and/or a related entity, Texaroda Oil Co.; that Wood
acknowledged the resulting indebtedness to petitioner; and that
the debt was worthless by December 31, 1985. Respondent argues
that the debt is not deductible because there was no bona fide
debt; petitioner has not substantiated payment; petitioner has
not proven worthlessness in 1985; and the debt was not business
related.
To be entitled to a bad debt deduction under section
166(a)(1), a taxpayer must show that the debt became wholly
worthless in the year in which it is claimed. Millsap v.
Commissioner, 46 T.C. 751 (1966), affd. 387 F.2d 420 (8th Cir.
1968). Worthlessness is a question of fact. Sec. 1.166-2(a),
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