Allen C. Chamberlin and Martha L. Chamberlin - Page 14

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          his generalized testimony.  Therefore, petitioners’ allowable               
          losses from their contributions or reloans of the Freedom Federal           
          loan proceeds to The Chamberlin Corp. or Chamberlin Parenteral              
          are no more than $450,000.                                                  
               The next argument of petitioners, which respondent does not            
          contest, is that petitioners’ bankruptcy estate is entitled to a            
          loss of $944,049 for its partial repayment of loans made by                 
          Ingersoll-Rand to The Chamberlin Corp.  The loans, which totaled            
          $2,900,000, were repaid to the extent of $944,049 by the                    
          bankruptcy estate of petitioners.  A guarantor, such as                     
          petitioner, who pays part of a loan for a corporation in                    
          bankruptcy is deemed to have made a loan to the corporation for             
          the amount paid to the creditor.  The loan, deemed made to the              
          corporation, is deductible as a worthless debt.  See sec. 1.166-            
          9, Income Tax Regs.                                                         
          Timing of Losses of Petitioners                                             
               Petitioners argue that their $1,255,400 loss arising from              
          Pharmacare should be recognizable in 1985, the year that the                
          assets of The Chamberlin Corp. were sold in bankruptcy.  This               
          argument hinges upon a finding that The Chamberlin Corp. and                
          Pharmacare should be regarded as the same entity.  However,                 
          Pharmacare terminated and ceased to exist after the closing of              
          its chapter 7 bankruptcy estate.  The Chamberlin Corp. was a                

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