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the actual payments made in satisfaction of such an obligation as
“payments” when made. Consequently, because the note provided
for payments to be made after the close of 1989, the taxable year
during which the disposition of the shares occurred, the
transaction is an “installment sale” within the meaning of
section 453(b)(1).
Petitioners argue that the note became worthless during 1989
and for that reason the installment sale provisions of section
453 do not apply. Petitioners, however, have not shown that the
note became worthless during 1989.7
The worthlessness of a debt is a question of fact. Crown v.
Commissioner, 77 T.C. 582, 598 (1981). A debt is considered
worthless when there are reasonable grounds for abandoning any
hope that the debt will be paid in the future. Estate of Mann v.
United States, 731 F.2d 267, 276 (5th Cir. 1984). Although a
taxpayer is not required to be an “incorrigible optimist” with
respect to the collection of debts owed to him, United States v.
S.S. White Dental Manufacturing Co., 274 U.S. 398, 403 (1927),
neither must a taxpayer be a “stygian pessimist”, Riss v.
7
We also are not persuaded by petitioners' contention that
requiring them to report the sale of the shares on the
installment method causes them to recognize income for taxable
year 1989 when the sale actually produced a loss. As we discuss
below, to the extent they suffer an allowable loss, petitioners
may avail themselves of the provisions of sec. 166 in the year
that the note becomes worthless. American Offshore, Inc. v.
Commissioner, 97 T.C. 579, 592-597 (1991).
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