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nonbusiness debt is allowed. See Black v. Commissioner, 52 T.C.
147, 151 (1969).
A bona fide debt arises from a debtor-creditor relationship
where there is a valid and enforceable obligation to pay a fixed
or determinable sum of money. See sec. 1.166-1(c), Income Tax
Regs. No deduction may be taken for money advanced without a
reasonable expectation of repayment. See Zimmerman v. United
States, 318 F.2d 611, 613 (9th Cir. 1963). Thus, for this Court
to find that petitioner and Estes entered into a valid debtor-
creditor relationship, petitioner must show that the loans were
not contingent and that they were made with a reasonable
expectation, belief, and intention that the advances would be
repaid. See id.
Contingent Debt
Respondent contends that repayment of the advances was
contingent upon the success of the Theratech device. Therefore,
respondent contends that these advances constitute contingent
loans. Respondent argues that, because the Theratech device was
never financially successful, the requisite contingency never
occurred and the debts never became bona fide. We disagree.
Respondent confuses contingencies with risk. A contingency
creates a condition precedent to the obligation to repay an
advance. See Zimmerman v. United States, supra; Ewing v.
Commissioner, 20 T.C. 216 (1953), affd. 213 F.2d 438 (2d Cir.
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