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the Christophers' home was foreclosed, and in 1993 the
Christophers filed for divorce.
During December 1990, Mr. Lencke contacted the Christophers
to discuss repayment of the $6,000 loan. He was informed that
Mr. Christopher was currently "out of work", and the Christophers
would therefore not be able to repay the loan. Petitioners then
decided not to pursue further collection of the debt.
Mr. Christopher told petitioners that Main Street Floral had
been sold by the Christophers in December 1990. However, the
Christophers did not enter into a contract to sell the floral
shop until January 19, 1991. Main Street Floral was sold for
$18,000, and the Christophers received the initial installment in
the amount of $3,000 on January 19, 1991. In December 1990, the
Christophers informed petitioners that any money they received
from the sale of their business would be used to repay their
obligation to the bank and would not be used to repay the $6,000
the Christophers owed to petitioners. In March 1994, Mr.
Christopher was employed by Wabash National Corporation.
Because of the Christophers' failure to repay petitioners
the $6,000 loaned to them, petitioners claimed a nonbusiness bad
debt deduction on their 1990 Federal income tax return. In the
notice of deficiency respondent disallowed petitioners' claimed
bad debt deduction because they failed to establish that the debt
became worthless in 1990.
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