John T. Barrett, Jr. and Jane W. A. Barrett - Page 17

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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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