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was ongoing, and the final deadline for claims was extended until
the following year so that the IRS could file its proof of claim.
Many of the claims against Drexel arose from securities
litigation, and the amount of Drexel’s liability in connection
with those claims could not be known until the litigation was
settled or proceeded to judgment. Contrary to petitioners’
contention, the size of the claims made against Drexel are not
necessarily probative of the state of its financial condition in
1990. For instance, we note that the IRS filed a Federal tax
claim against Drexel in the amount of $5.3 billion, which
apparently was settled for, inter alia, a payment of $183 million
in 1992 and a payment of $106 million in interest over the next 6
years. Finally, Drexel filed a petition for reorganization
pursuant to chapter 11, which, absent evidence that the creditors
have suggested dismissal, often carries a strong presumption that
the reorganization was not hopeless. Mayer Tank Manufacturing
Co. v. Commissioner, 126 F.2d 588, 592 (2d Cir. 1942); see Simon
v. Commissioner, T.C. Memo. 1978-485. The record in the instant
case indicates to us that the events that occurred in 1990 do not
require a conclusion that all reasonable hope that the note would
be paid, at least in part, could be abandoned in that year.
Estate of Mann v. United States, supra at 276.
Petitioner’s subjective perceptions of Drexel’s financial
condition on February 13, 1990, are insufficient to support
petitioners’ claim that the note became worthless during 1990.
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