Warren Jack Kidder and Barbara Jeanne Kidder - Page 4

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          $75,000 claim in the bankruptcy proceeding.  Ultimately, Mr. and            
          Mrs. Bogue received a discharge from bankruptcy and relief from             
          their debts, including petitioners’ claim.                                  
               In the preparation of their 1992 income tax return,                    
          petitioners were advised by their accountant that the claim                 
          against Mr. Bogue could be deducted as a bad debt against                   
          petitioners’ long-term capital gains.  During 1993, when                    
          petitioners were compiling information for the preparation of               
          their 1992 income tax return, they performed a more thorough                
          analysis of the total amount that had been advanced to Mr. Bogue            
          over the years.  Based on their analysis of numerous documents,             
          petitioners calculated that the total outstanding advances made             
          to or on behalf of Mr. Bogue was $145,267, and they claimed that            
          amount as a bad-debt loss on their 1992 return.  Petitioners                
          produced substantial amounts of documentation reflecting that               
          they had made numerous advances to and on behalf of Mr. Bogue,              
          beginning in 1987.                                                          
               We must determine whether the advances made by petitioners             
          represent loans to Mrs. Kidder’s son, and if so, whether the                
          loans became worthless in 1992.  In general, section 166(a)2                

               2  All section references are to the Internal Revenue Code             
          in effect for the years in issue, and all Rule references are to            
          the Tax Court Rules of Practice and Procedure, unless otherwise             

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