Warren Jack Kidder and Barbara Jeanne Kidder - Page 7

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          Bogue’s bankruptcy attorney during 1992, made an estimate of                
          $75,000.  In connection with the preparation of petitioners’ 1992           
          tax return, they conducted a more thorough evaluation and                   
          concluded that the amount advanced to Mr. Bogue was almost double           
          the amount petitioners had claimed in the bankruptcy proceeding.            
               Although petitioners contend that the advances were loans              
          with the expectation of repayment, the record contradicts such a            
          conclusion.3  Based on the facts and circumstances in this                  
          record, petitioners’ advances were made with compassion and                 
          generosity.  The record also reveals that Mr. Bogue was in                  
          financial and other types of difficulty throughout the entire               
          period in which the advances were made.  It was, therefore,                 
          highly unlikely that he would be able to repay the advances.                
          Although petitioners are generous parents who financially                   
          supported their child in his time of need, the circumstances here           
          do not show a bona fide debtor-creditor relationship and                    
          entitlement to a bad-debt deduction under section 166.  See Kean            
          v. Commissioner, 91 T.C. 575 (1988).                                        
               Respondent also determined that petitioners are subject to             
          an addition to the 1992 tax for late filing of their return and a           

               3 Because we hold that petitioners did not have a debtor-              
          creditor relationship and that the advances were in the nature of           
          gifts and were not loans, it is unnecessary to decide whether               
          petitioners substantiated the amounts claimed for their 1992 and            
          1993 taxable years.                                                         

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