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We do not believe that the record, including the testimony
of petitioner's attorney, supports petitioner's contention that
the cost of collecting on the alleged debt would have exceeded
its value. Petitioner's attorney in the litigation over the
Redemption Agreement, William Horton, testified that based on his
experience in litigating against William, he believed that
William would be a tenacious and difficult adversary in any
further litigation. In light of this experience, Mr. Horton
believed that pursuing the debt "wasn't worth it" and so advised
petitioner and his accountant.
This testimony does not establish that the costs of
collection would exceed the value of a debt claimed to equal
$134,116. Indeed, petitioner presented no evidence that he or
Lakeview ever even made a demand for payment to William. In
light of the fact that William had sufficient assets with which
to pay the alleged debt, we do not believe that petitioner has
proven that attempts to collect on the debt would have been
futile. We thus conclude that petitioner has failed to prove
that, assuming a bona fide debt existed, it was worthless.
2. Rent Deduction
Lakeview deducted $75,000 as rent on its 1992 return, which
was disallowed by respondent. Petitioner claims that Lakeview
paid $75,000 to William in late 1992 as "back rent" on the Fence
Property. Petitioner testified that sometime after the
conclusion of the trial in the action brought by William, William
demanded that he be paid rent by Lakeview for Lakeview's use of
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