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fide debtor-creditor relationship exists is a question of fact
which ultimately requires a determination as to whether there was
a genuine intention to create a debt, with reasonable expectation
of repayment, and whether that intent comports with the economic
reality of creating a debtor-creditor relationship. Litton Bus.
Sys., Inc. v. Commissioner, 61 T.C. 367, 377 (1973); see also
A.R. Lantz Co. v. United States, 424 F.2d 1330, 1334 (9th Cir.
1970); Fisher v. Commissioner, 54 T.C. 905, 909 (1970). There
is no standard test or formula for determining worthlessness
within a given taxable year; the determination depends upon the
particular facts and circumstances of the case. Crown v.
Commissioner, 77 T.C. 582, 598 (1981). Generally, however, the
year of worthlessness is fixed by identifiable events that form
the basis of reasonable grounds for abandoning any hope of
recovery. United States v. S.S. White Dental Manufacturing Co.,
274 U.S. 398 (1927); American Offshore, Inc. v. Commissioner, 97
T.C. 579, 593 (1991); Crown v. Commissioner, supra. Moreover, a
debt will generally be considered worthless only when it can be
reasonably expected that the debt is without possibility of
future payment and legal action to enforce the debt would not
result in satisfaction. Hawkins v. Commissioner, 20 T.C. 1069
(1953); sec. 1.166-2(b), Income Tax Regs.
Respondent asserts that petitioners are not entitled to a
bad debt deduction because: (1) Petitioners have failed to
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