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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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