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the debt. Trinco Indus., Inc. v. Commissioner, 22 T.C. 959, 965
(1954). Consideration must be given to the debtor’s potential
for improving its financial position. Dustin v. Commissioner, 53
T.C. 491, 502 (1969), affd. 467 F.2d 47 (9th Cir. 1972).
The mere belief of the creditor that the debtor is in bad
financial condition is not adequate evidence that the debt is
worthless. Bryan v. Commissioner, 32 T.C. 104, 131 (1959), affd.
in part and remanded on another issue 281 F.2d 238 (4th Cir.
1960). Moreover, the subjective, good faith opinion of the
taxpayer that the debt is uncollectible, standing alone, is not
sufficient evidence that the debt is worthless. Fox v.
Commissioner, 50 T.C. 813, 822 (1968), affd. per curiam by an
unreported order (9th Cir. March 9, 1970).
Applying the foregoing cases, we hold that the record in the
instant case fails to establish that the note was worthless
during 1989. Several considerations support our conclusion. We
begin with the fact that Drexel continued to engage in business
throughout 1989 and into 1990. Petitioner admitted at trial
that, based on its continued operations, Drexel seemed viable as
a going concern. Drexel’s continued business operations through
and beyond 1989, even though it may have been faltering, indicate
that the note did not become worthless during 1989. Riss v.
Commissioner, 56 T.C. at 408. Where a financially troubled
company remains actively engaged in business, the potential
ability to pay some of its debts may exist. Pierson v.
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