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corporation other than the judgment and that, in his opinion, the
judgment was virtually worthless. Upon the receiver's
recommendation, the receiver was discharged and the judgment of
the corporation was transferred to petitioner in consideration of
petitioner's payment of all attorney's fees related to the suit,
the receivership, and the collection efforts made in Florida.
From 1981 to 1987, petitioner paid a total of $11,682.75 in
attorney's fees to the law firm that handled the suit and also
served as the receiver.
Once the judgment was transferred to petitioner, he retained
the same counsel in Florida to continue efforts to collect the
judgment. In 1989, the Florida attorney informed petitioner that
the judgment was not collectible because the judgment debtors had
no assets. There is no evidence in the record to show that there
was ever any likelihood of collection of the judgment between
1985 and 1989. At this point, petitioner was out $122,682.75,
consisting of the $111,000 "investment certificates" and the
$11,682.75 he spent in attorney's fees to have the judgment
transferred to him and to attempt collection against the debtors.
Petitioner concluded, in 1989, that the $122,682.75 constituted a
worthless business debt. Therefore, beginning in 1989 and
through the years at issue, petitioners claimed on their Federal
income tax returns, as business bad debts, an amount that would
reduce their Federal income tax for the respective years to
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