-23- abandonment of his interest in the joint venture or the road construction equipment, and, accordingly, he is not entitled to a deduction for the joint venture interest or undepreciated value of the machinery for the taxable years before the Court. Concerning the amounts advanced to the joint venture, a debt becomes deductible when it becomes worthless. Denver & R.G.W. R.R. v. Commissioner, 32 T.C. 43 (1959), affd. 279 F.2d 368 (10th Cir. 1960). Petitioner bears the burden of proving when and if a debt is worthless. Rule 142(a); James A. Messer Co. v. Commissioner, 57 T.C. 848 (1972). The question of worthlessness is factual, and the standard has been described in the following manner: Debts are wholly worthless when there are reasonable grounds for abandoning any hope of repayment in the future. Dallmeyer v. Commissioner, 14 T.C. 1282, 1292 (1950), and it could thus be concluded that they have lost their "last vestige of value." Bodzy v. Commissioner, 321 F.2d 331, 335 (5th Cir. 1963). This will usually entail proof of the existence of identifiable events which demonstrate the valuelessness of the debts. Riss v. Commissioner, 478 F.2d 1160 (8th Cir. 1973); Crown v. Commissioner, 77 T.C. 582, 598 (1981); Hubble v. Commissioner, 42 T.C.M. 1537, 1544 (1981). Estate of Mann v. United States, 731 F.2d 267, 276 (5th Cir. 1984). In mid-1986, petitioner entered into the joint venture with Ms. Jackson and began advancing funds. Ms. Jackson had cash-flow problems. Petitioner agreed to become involved with Ms. Jackson although he was aware of her business history. He advancedPage: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Next
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