- 19 - Commissioner, 56 T.C. 388, 408 (1971), affd. in part and remanded 478 F.2d 1160 (8th Cir. 1973). The mere fact that a business is on the decline, that it has failed to make a profit, or that its debt obligation may be difficult to collect does not necessarily justify treating the debt obligation as worthless. Riss v. Commissioner, supra at 407. The fact that a debtor is able to continue business operations in the face of operating losses and receives continued financial backing of the creditor militates against a finding that the debt obligation has become worthless. See Roth Steel Tube Co. v. Commissioner, supra at 1182; Riss v. Commissioner, supra at 408. The record in this case does not establish that Nihon Intergraph’s debt obligation to Intergraph became worthless in 1987. Although Nihon Intergraph’s liabilities may have exceeded its assets during 1985, 1986, and 1987, Nihon Intergraph continued to operate as a going concern, and Intergraph continued to extend its guarantee in support of the overdraft privilege. Even at the time of Intergraph’s transfer of the �823,943,385 into Nihon Intergraph's checking account, Intergraph intended for Nihon Intergraph to continue operating in Japan, and Intergraph continued to provide funds to Nihon Intergraph. It has not been established that in 1987 there existed no reasonable expectation that Intergraph would be repaid forPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011