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respect to payments not received from Clinch River for
petitioner's renovation of the mill.
On audit, respondent accepted petitioner's reductions of
$636,000 and $340,148 to the originally accrued total income of
$5,136,000 relating to petitioner's contract with Clinch River.
Respondent, however, issued a notice of deficiency disallowing
the claimed $600,000 bad debt deduction on the ground that
petitioner had not established that the balance of the debt still
owed to petitioner from Clinch River was wholly or partially
worthless.
In the notice of deficiency, respondent also determined that
petitioner was liable for an addition to tax under section
6651(a)(1) for failure to timely file a 1989 corporate Federal
income tax return. Because petitioner's $60,000 estimated tax
payment due with the May 15, 1989, extension request was not
received by respondent until 2 days after that date, this $60,000
payment was not included by respondent in the computation under
section 6651(b) of the amount of the delinquency addition to tax
under section 6651(a)(1).
Petitioner now argues, in the alternative, that either the
$600,000 claimed bad debt deduction should be allowed or the 1989
yearend accrued income of $4,159,852 relating to the contract
with Clinch River should have been, and should now be, reduced by
an additional $600,000 because of the contingencies associated
with Clinch River's obligation to make further payments to
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