- 6 -
evidence in the record, including a copy of his daughter's 1991
Federal income tax return, we find that petitioner's daughter was
unmarried and resided with petitioner for more than one-half of
the year. Under section 2(b)(1)(A), an unmarried individual may
file a return as "head of household" if that individual maintains
a household which constitutes for more than one-half of such
taxable year the principal place of abode of an unmarried son or
daughter of the taxpayer. Therefore, petitioner is entitled to
head-of-household filing status for 1991.
Bad Debt Deduction in 1990
On several occasions from 1981 to 1991, petitioner loaned
money to individuals, receiving interest-bearing notes in return.
On January 19, 1990, petitioner loaned $5,296.70 to James C.
Murphy, who died one month later without making any payments on
the loan. Petitioner never collected on this debt, and claimed a
bad debt deduction in the amount of $5,200 on his 1990 return.
Section 166(a) generally allows a deduction for any debt
that becomes worthless during the taxable year. Bad debts may be
characterized as either business bad debts or nonbusiness bad
debts. Sec. 166(d). Section 166(d)(1)(B) provides that
nonbusiness bad debts are deductible as short-term capital
losses.
While petitioner claimed the $5,200 deduction as a business
bad debt loss, respondent characterized the loss as a nonbusiness
bad debt, thereby limiting petitioner's deduction to $3,000 for
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011