- 7 - Estes' debt, petitioner, Estes, and the architect went to Beijing to investigate the hotel project and the market for the Theratech device. Unfortunately, shortly after the party returned to the United States, and before any contracts were signed, the architect died. No further attempts were made to market the device in China, and the Theratech stock soon became worthless. In 1993, petitioner demanded payment on the notes. Estes, however, was in the middle of a divorce, was without funds and living in the home of a relative, and was considering filing for bankruptcy. Estes transferred the title of his only asset, a power boat, to petitioner. Upon the advice of his attorney, petitioner decided that it would be futile to make further attempts to collect on the notes. Petitioners claimed a deduction on their 1993 return for a $266,323 nonbusiness bad debt loss, and a capital loss carryover on their 1994 return. Respondent determined that petitioners were not entitled to the deductions. OPINION In the notices of deficiency, respondent disallowed the losses on the grounds that petitioners failed to establish the amount of the debt and that it became uncollectible during the 1993 taxable year. On brief, respondent argues that petitioner did not prove that a true debtor-creditor relationship wasPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
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