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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 for
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