Larry J. and Angela L. Siggelkow - Page 5




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          owed to PLG’s outside creditors were paid in full, but no funds             
          were made available to repay petitioner.                                    
               Petitioner claimed that PLG’s failure to pay him the                   
          remaining money resulted in a bad business debt.  On his 1992 tax           
          return, he claimed a deduction of $78,271.  He later claimed that           
          this amount should have been $100,000.  He had claimed the lower            
          amount on the advice of his tax preparer.  Respondent determined            
          a $24,993 deficiency by disallowing petitioner’s claimed ordinary           
          loss for a bad business debt under section 166.  Computational              
          adjustments were also made due solely to the increase in                    
          petitioner’s adjusted gross income.                                         
                                       OPINION                                        
               We must decide whether petitioner is entitled to a business            
          bad debt deduction for the advances made on PLG's behalf.                   
          Respondent argues that petitioner is not entitled to the                    
          deduction because the advance did not constitute a business loan.           
          On brief, respondent also argued that the advance was not a bona            
          fide loan and that it did not become worthless as petitioner                
          claimed.  However, in the notice of deficiency, respondent                  
          already conceded that the advance was a nonbusiness bad debt,               
          which petitioner could deduct as a short-term capital loss rather           
          than as the ordinary loss claimed for 1992, and calculated                  
          petitioner's tax deficiency accordingly.                                    
               In order to maintain an ordinary loss, petitioner must                 
          demonstrate that the loan qualifies for section 166 treatment.              
          White v. United States, 305 U.S. 281 (1938); United States v.               

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