- 14 -
Estes' debt to the bank for his power boat. Petitioners claimed
a deduction for a bad debt loss of $266,323 on their return for
1993. Petitioner offered no explanation at trial for the
difference in these amounts; however, on brief petitioners stated
that the amount of the debt was reduced for the value of the
power boat that Estes transferred to petitioner in 1993. We have
found that only the transfers made before 1983 created bona fide
debt. Accordingly, we reduce the pre-1983 bad debt amount by the
value of the transferred power boat, which we find had a value of
no less than $41,000.
Petitioner testified at trial that he placed the 100,000
shares of stock in a joint account with Estes, that he expected
Estes to repay him from the proceeds of the stock sales, and that
he and Estes sold the stock held in the joint account in small
amounts to maximize its value. Evidence was introduced at trial
which shows that the stock was sold; however, petitioner made no
reduction in the debt for these sales. Accordingly, we reduce
the amount of the pre-1983 bad debt for the sale proceeds of the
100,000 shares of Theratech stock that were placed in the joint
account.
Year of Worthlessness
Petitioner asserts that the loans became worthless in 1993.
Respondent argues that there is no evidence with respect to
Estes' financial circumstances between 1993 and prior years that
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011