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relied on by respondent involved a situation where the taxpayer
claimed partial worthlessness where the debtor’s liabilities were
seven times its assets. The Court, in denying the taxpayer’s
claim, found: That although the liabilities exceeded assets by a
ratio of 7 to 1, the assets had considerable value; in the year
of the taxpayer’s claim and the following year the debtor made
repayments, and the repayments continued until the debt was
reduced to an amount smaller than claimed loss. See Miller
Realty Co. v. Commissioner, T.C. Memo. 1977-440.
In petitioner’s circumstances, Snacks’ negative net worth
was steadily increasing. The increases during the 1991, 1992,
and 1993 periods, however, were to some great extent attributable
to advances from K&H. More importantly, petitioner has not shown
any identifiable events that “clearly mark the futility of any
hope of further recovery.” The accountant’s purchase of the
notes for a nominal amount was a transaction for convenience and
as a courtesy to petitioner, and did not evidence the
worthlessness of the notes. We also agree with respondent’s
observation that K&H’s continued extension of credit is not
consistent with the claim of worthlessness. Although the
advances are business debt within the meaning of section 166, no
portion of them became worthless during petitioner’s 1991, 1992,
or 1993, taxable year. We also note that even if the sale of the
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