- 27 -
and (B). Nonbusiness debts can only be deducted as short-term
capital losses in the year in which they become wholly worthless.
Sec. 166(d)(1)(A) and (B); Dustin v. Commissioner, 53 T.C. 491, 501
(1969), affd. 467 F.2d 47 (9th Cir. 1972); sec. 1.166-5(a)(2),
Income Tax Regs. Worthlessness in a particular year is a question
of fact that must be determined by "an examination of all the
circumstances". Dallmeyer v. Commissioner, 14 T.C. 1282, 1291
(1950). Relevant considerations include circumstances such as the
solvency of the debtor and efforts to collect the debt.
The year a debt becomes worthless is fixed by identifiable
events that form the basis of reasonable grounds for abandoning any
hope of recovery. Crown v. Commissioner, 77 T.C. 582, 598 (1981).
Petitioner must establish sufficient objective facts from which
worthlessness could be concluded; mere belief of worthlessness is
insufficient. Fox v. Commissioner, 50 T.C. 813, 822-823 (1968),
affd. per curiam 25 AFTR 2d 70-891, 70-1 USTC par. 9373 (9th Cir.
1970).
We agree with respondent that petitioner's claim against BCCI
was not worthless in 1991. Petitioner had claims pending against
BCCI in liquidation at the close of 1992.15 Cf. Halliburton Co. v.
15 This case is similar to Sandquist v. Commissioner, T.C.
Memo. 1978-281, where this Court found that the bank had assets
(continued...)
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