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Coopers’ house and sold it in 1988. Accordingly, petitioner has
failed to meet its burden of proof.
We add that if the 1989 note is viewed as a separate debt
from the earlier debt, petitioner has failed to show that such
debt had value when created, or when acquired by AFLIC. Without
that showing, a deduction is not permitted. See, e.g., Garrett
v. Commissioner, 39 T.C. 316, 317 (1962).
Finally, petitioner has failed to prove AFIC’s basis in the
note, which is required in order to take a section 166 deduction.
Sec. 166(b). Normally, for section 166(b) purposes, a taxpayer’s
basis in property is the cost of such property. Secs. 1011 and
1012. The assignment agreement stated that the assignment was
“For a valuable consideration, the receipt and sufficiency of
which is hereby acknowledged”. Lee testified that AFIC
reimbursed AFLIC for the amount of the debt; i.e., that AFLIC
furnished consideration for the debt. However, we have found no
evidence of any such payments and would not, therefore, be able
to determine the amount allowable as a deduction under section
166. Accordingly, we sustain respondent’s disallowance of
petitioner’s bad debt deduction.
Decision will be entered
under Rule 155.
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