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members have been considered gifts in the absence of sufficient
evidence of a true expectation of repayment and intent to enforce
collection of the debt. See Perry v. Commissioner, supra at 481;
Estate of Reynolds v. Commissioner, 55 T.C. 172, 201 (1970);
Estate of Van Anda v. Commissioner, 12 T.C. 1158 (1949), affd.
per curiam 192 F.2d 391 (2d Cir. 1951). Even if petitioner’s
father made the two payments reflected in the trial exhibit, that
evidence is insufficient, by itself, to show the existence of
bona fide debt.
Had petitioners shown that a bona fide debt existed, they
would not have been entitled to a deduction for the tax year 1992
because petitioners did not show worthlessness in that year. See
sec. 166(a)(1). In determining the worthlessness of a debt, all
available evidence including the value of any security and the
financial condition of the debtor must be considered. See sec.
1.166-2(a), Income Tax Regs. A taxpayer must provide evidence of
the worthlessness of the debt. See sec. 1.166-2(b), Income Tax
Regs. A debt becomes worthless in the tax year in which a
creditor, using sound business judgment, abandons all reasonable
hope of recovery on the basis of the available information
regarding the surrounding circumstances of the debt. See Crown
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