- 13 - petitioner has failed to demonstrate the amount of the debt. A debt for purposes of section 166 must be an enforceable obligation to pay a "fixed or determinable sum of money”. Sec. 1.166-1(c), Income Tax Regs. In Iowa S. Utils. Co., the debt had been adjudicated, and the State court judgment served to make the debt "a fixed or determinable sum" in the Court of Claims' view. Iowa S. Utils. Co. v. United States, supra at 495. Here, the only evidence of the amounts William diverted, which he disputes, is the testimony of petitioner and his accountant that the ratio of cash to total sales for the then-current 18-month period was computed, and then an estimate of the cash sales for the years 1984 through 1990 was made by applying the current-period ratio to actual sales in those past years. There is no evidence in the record of the reasonableness of this estimate, the appropriateness of applying the current ratio to past years, or of any corporate records to support the accuracy of this estimate. On this record, petitioner has failed to show that the debt he alleges was of a "fixed or determinable" amount. Second, petitioner has not shown that the debt became worthless in 1992. Section 166 allows a deduction for debts which become worthless "within the taxable year." To meet this requirement, the taxpayer must prove that the debt had value at the commencement of the year for which deduction is sought and that it became worthless during that year. Estate of Mann v. United States, 731 F.2d 267, 275 (5th Cir. 1984); James A. Messer Co. v. Commissioner, 57 T.C. 848, 861 (1972); Shipley v.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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