- 6 -6 silverware, and dishes). Petitioners were aware that other creditors of the Dubatos were also dunning them for payment. This included a meat supplier, a food supplier, and a State revenue officer who, Mrs. Bauer saw, “came in and took the money right out of the drawer for sales tax”. The Dubatos continued living in Bullhead City for some part of 1994, but later on during the year, they eventually moved. At the time of trial, petitioners were unaware of the Dubatos’ whereabouts. On their 1993 Federal income tax return, petitioners claimed a $10,901 business bad debt deduction. In the notice of deficiency, respondent, inter alia, disallowed the bad debt deduction. At trial, petitioners conceded that their advances were nonbusiness debts, and they now seek only a nonbusiness bad debt deduction. All other adjustments in the notice of deficiency have been resolved. Discussion The Commissioner’s determinations are presumed correct, and petitioners bear the burden of proving that those determinations are erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Section 166(a) permits a deduction for any bona fide debt that becomes worthless within the taxable year. To qualify for the bad debt deduction, there must be a debtor-creditor relationship. Sec. 1.166-1(c), Income Tax Regs. Whether a bonaPage: Previous 1 2 3 4 5 6 7 8 9 Next
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