-5-
Petitioner must prove that respondent's determinations set
forth in the notices of deficiency are incorrect. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Petitioner must
also prove his entitlement to any claimed deduction. Deductions
are strictly a matter of legislative grace, and petitioner must
show that his claimed deductions are allowed by the Code. New
Colonial Ice Co. v. Helvering, 292 U.S. 435 (1934).
Section 166(a)(1) allows a deduction for any debt that
becomes worthless "within the taxable year". Although petitioner
advanced nearly $2 million to the company between 1991 and 1993,
he claimed worthlessness as to only about one-fourth of that
amount in 1993. Petitioner classified these advances as
nonbusiness bad debts. Nothing in the record serves to identify
which, if any, of petitioner's advances to the company became
unenforceable in 1993, nor is there any explanation as to why
some of the advances might have became uncollectible in that year
while others did not. In effect, petitioner treated these
advances, which he classified as nonbusiness debts, as partially
worthless in 1993. A nonbusiness bad debt is deductible only in
the year it becomes totally worthless. No deduction for partial
worthlessness is allowed. Black v. Commissioner, 52 T.C. 147,
151 (1969). As an additional ground for denying this deduction,
we note that petitioner has alleged no specific fact or set of
facts which would establish that 1993 was the year in which his
advances to the company became worthless. To qualify for a bad
debt deduction, a taxpayer must show that "some event occurred
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011