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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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