Stanley P. Zurn - Page 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            
               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                   
          Estate of Mann v. United States, 731 F.2d 267, 276 (5th Cir.                
               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 advanced                 

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