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indication that any of the $3,500 was a loan from petitioners to
Cirtex. Assuming that the $3,500 was a loan, and not a capital
contribution, petitioners offered no evidence to prove that the
unreimbursed portion ($1,500) became worthless. Petitioners failed
to satisfy their burden of proof establishing the existence of the
claimed loan as well as the year in which the purported loan became
worthless. They are thus not entitled to a bad debt deduction with
respect to this purported loan.
Petitioners claim they paid $4,000 to Esstec, a
nonincorporated business, on behalf of Cirtex. The owner of
Esstec, Stephen Williams, also was a Cirtex employee and had rented
space in Cirtex's building. Cirtex did not provide a note to
evidence petitioners' payment on its behalf. The only evidence
presented was petitioners' check, dated July 11, 1988, made payable
to Esstec. The notation at the bottom of the check stated "Esstec
loan". Mrs. Yei testified that Esstec went out of business in
1989, but her testimony in this regard was not credible.
Petitioners did not satisfy their burden of proof to establish the
identity of the borrower, the existence of a loan, or the year in
which the purported loan became worthless. Thus, they are not
entitled to a bad debt deduction with respect to this purported
loan.
Petitioners sold an automobile to Stephen Williams for $2,000
in 1988, reporting $500 in income on their 1988 return and $1,500
in income on their 1989 return. Petitioners claim that they did
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