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claims made against Drexel in relation to its assets shows that
there was no hope that the note would be paid.
As respondent points out, however, a debtor’s petition in
bankruptcy is not conclusive of a debt’s total worthlessness.
Estate of Mann v. United States, supra at 276; Dallmeyer v.
Commissioner, supra at 1292-1293; sec. 1.166-2(c), Income Tax
Regs. The debtor may have assets remaining that will permit some
amount to be paid to creditors. Patten & Davies Lumber Co. v.
Commissioner, 45 F.2d 556, 558 (9th Cir. 1930), revg. a
Memorandum Opinion of this Court dated July 29, 1929. The
question whether any of Drexel’s assets would be available to pay
the note depends upon the value of Drexel’s assets, the amount
and validity of secured and priority claims filed, and the cost
of the bankruptcy administration, and not solely on Drexel’s
financial history which ultimately led to its bankruptcy
petition. Dallmeyer v. Commissioner, supra at 1292-1293; see
also Patten & Davies Lumber Co. v. Commissioner, supra at 558.
Petitioners have failed to show the value of Drexel’s
assets, the amount and validity of secured and priority claims
filed, and the cost of the bankruptcy administration. Indeed,
the record indicates to us that those factors could not be
determined with any degree of certainty during 1990. Such
uncertainty precludes a conclusion that the note became worthless
in that year. Dallmeyer v. Commissioner, supra at 1293. During
1990, the process of making and evaluating claims against Drexel
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