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shades, and knew how the advance was to be used. Thus, we
believe petitioner genuinely intended to create a debt.
In addition, we believe there was a reasonable expectation
of repayment. When petitioner advanced the funds to Maxted, he
expected to be fully repaid within 90 days. By that time,
petitioner believed the car shades would be constructed and sold.
Moreover, prior to advancing the funds, petitioner visited
Maxted's operation to observe the construction and packaging of
the car shades. Petitioner advanced the funds specifically so
that Maxted could purchase enough material to construct a large
quantity of car shades. Thus, petitioner could have reasonably
concluded that Maxted would be financially capable of repaying
the advance from the sale of these car shades. Indeed, Maxted
advised petitioner numerous times that the advance would be
repaid once the car shades were sold. In light of the evidence
presented, we conclude that the obligation of Maxted to
petitioner did constitute a bona fide debt under section 166.
A bad debt is deductible only in the year it becomes
worthless. Denver & R. G. W. R. Co. v. Commissioner, 32 T.C. 43,
56 (1959), affd. 279 F.2d 368 (10th Cir. 1960); Feinstein v.
Commissioner, 24 T.C. 656, 658 (1955). Petitioner has the burden
of proving that the debt became worthless during the year in
question. Rule 142(a); Estate of Mann v. United States, 731 F.2d
267, 275 (5th Cir. 1984); James A. Messer Co. v. Commissioner, 57
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