Kaps Warehouse, Inc. - Page 23

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            petitioner has failed to provide any evidence that NPC could not                          
            have paid the majority of its accounts payable to petitioner.                             
                  Before the rebates, NPC had net losses of $56,899 in fiscal                         
            year 1991 and $113,993 in fiscal year 1992.  Here again, evidence                         
            of an operating loss is not sufficient to prove worthlessness when                        
            there are current assets available to pay current debts.  Even                            
            where a business is shown to be insolvent as its liabilities exceed                       
            its assets, evidence of insolvency based on book figures does not                         
            necessarily establish worthlessness.  Brimberry v. Commissioner,                          
            supra at 976; Trinco Indus., Inc. v. Commissioner, supra.  Where an                       
            entity is still actively engaged in business and has assets                               
            sufficient to pay off a greater part of the loan, the debt is not                         
            considered worthless.  Trinco Indus., Inc. v. Commissioner, supra.                        
            In NPC's case, it was still actively engaged in business.                                 
                  It appears that NPC had sufficient current assets to cover 90                       
            percent of total current payables to petitioner in fiscal year 1991                       
            and 79 percent of total current payables in fiscal year 1992.  Any                        
            arm's-length creditor of NPC would not have been content to write                         
            off NPC's accounts payable owed to the creditor.  Petitioner again                        
            has failed to provide sufficient evidence that its rebates to NPC                         
            during the years at issue were based on bad debts.                                        
                        4.  Other Evidence                                                            
                  The record contains other evidence contradicting petitioner's                       
            argument that the writeoffs were worthless.  First, petitioner kept                       

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