Warren Jack Kidder and Barbara Jeanne Kidder - Page 5

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          allows an individual to deduct losses sustained from bad debts              
          that become worthless during the taxable year.  Section 166(d)(1)           
          restricts the deduction for losses from nonbusiness debts of a              
          taxpayer other than a corporation by characterizing them as                 
          short-term capital losses.  Only a bona fide debt, arising from a           
          "debtor-creditor relationship based upon a valid and enforceable            
          obligation to pay a fixed or determinable sum of money" qualifies           
          for a deduction under section 166.  Sec. 1.166-1(c), Income Tax             
          Regs.  Whether a bona fide debtor-creditor relationship exists is           
          a question of fact to be determined upon a consideration of all             
          the facts and circumstances.  See Fisher v. Commissioner, 54 T.C.           
          905, 909 (1970).  Petitioners must show that a bona fide debt               
          existed between them and Mr. Bogue.  See Rockwell v.                        
          Commissioner, 512 F.2d 882, 885 (9th Cir. 1975), affg. T.C. Memo.           
          1972-133.                                                                   
               We also note that intrafamily transactions are subjected to            
          closer scrutiny.  See Caligiuri v. Commissioner, 549 F.2d 1155,             
          1157 (8th Cir. 1977), affg. T.C. Memo. 1975-319; see also Perry             
          v. Commissioner, 92 T.C. 470, 481 (1989), affd. 912 F.2d 1466               
          (5th Cir. 1990).  It is more likely that a transfer between                 
          family members is a gift.  See Perry v. Commissioner, supra;                
          Estate of Reynolds v. Commissioner, 55 T.C. 172, 201 (1970).                
          Petitioners may overcome this inference by showing that a real              
          expectation of repayment existed and that there was an intent to            





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