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nearly zero. More specifically, petitioners deducted $32,000 in
1989, $22,418 in 1990, $28,629.05 in 1991, and $24,340 in 1992.
Petitioners intended to continue claiming bad debt deductions on
their Federal income tax returns until the deductions equaled the
$122,682.75.
Respondent did not audit petitioners' 1989 return. In the
notices of deficiency, respondent disallowed the claimed bad debt
deductions for tax years 1990 through 1992. Respondent
determined that the deductions were not allowable "because it has
not been established that you incurred these losses as business
bad debts. If it should be determined that you did incur these
bad debt losses in the respective years, then you would be
entitled to non-business bad debts only." The facts relating to
other adjustments that remain at issue are discussed later in
this opinion.
The determinations of the Commissioner in a notice of
deficiency are presumed correct, and the burden of proof is on
the taxpayer to show that the determinations are incorrect. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
In general, section 166(a) allows a deduction for any debt
that becomes worthless during the taxable year. To qualify for a
worthless debt deduction, the taxpayer must show that a debtor-
creditor relationship was intended between the taxpayer and the
debtor, that a genuine debt in fact existed, and that the debt
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