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paid on petitioner's behalf by petitioner's father constitutes
nondeductible personal interest as that term is used in section
163(h)(1).4
We have also considered, and reject, petitioners'
alternative argument that the interest deductions should be
allowed under the provisions of section 166. That section
generally allows a deduction for any bad debt that becomes
worthless during the taxable year. In order to be entitled to a
section 166 deduction, petitioners must establish that petitioner
was owed a bona fide debt by Stone Jessup on account of the
interest payments made, and that such debt became worthless in
1991. Rule 142(a); Crown v. Commissioner, 77 T.C. 582, 598
(1981); Rude v. Commissioner, 48 T.C. 165, 172 (1967). This they
have failed to do. Even assuming that petitioner's status as a
comaker on the notes with Stone Jessup resulted in a debtor-
creditor relationship between the two because it was petitioner
rather than Stone Jessup who satisfied the obligations created by
the notes, there is nothing in the record to indicate that any
debt that would have resulted was worthless as of the close of
1991. Accordingly, petitioners have not established that they
are entitled to a bad debt deduction pursuant to section 166 on
account of the interest payments made to the bank.
4As an aside, we note that the provisions of sec. 163(h)(1)
also prohibit petitioners from deducting the interest paid by the
notes.
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