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occupancy of the Foxbriar property after the expiration of the
earnest money contract and also during the time they believed
they were assuming the property. Thus, the Court finds that
these moneys did not constitute a bona fide debt owed by the
Hewitts to petitioners.
With respect to the $969 in plumbing repairs, petitioners
had a potential claim for reimbursement of these moneys in 1991.
This amount was included as a part of the $29,935.31 awarded to
petitioners in the 1997 District Court decision as restitution
for improvements and repairs made to the Foxbriar property.
Thus, the $969, among other amounts, gave rise to a bona fide
debt owed to petitioners by the Hewitts (that was reduced to
judgment) in 1997 rather than in 1991. There is insufficient
evidence in the record to determine whether or not this debt
became worthless and, if so, in what year.15 Also, as noted
earlier, the proceeds from the foreclosure sale were supposed to
have covered this item. This Court is certain, however, that the
$969 was not a worthless debt in 1991 or 1992, and this Court’s
review of petitioners’ tax liability is limited to the years at
issue in this case.
15 Vague assertions were made by petitioners that Mr.
Hewitt discharged this debt in bankruptcy; however, no indication
was given as to the year in which the debt was discharged, and no
documentary evidence was offered to prove the discharge.
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