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or financial reports on the persons whose auto loans he bought
from Mr. Tooke. He added that he had "nothing to gain by taking
action" so his attitude was, "in many cases, just wait and see
what happens." Although petitioner allowed mechanics lienors to
foreclose on four of the vehicles in 1991 or 1992,2 there is no
evidence that the notes secured by the vehicles did not become
worthless in years before or after the foreclosures.
A debt does not become worthless merely because the creditor
elects not to enforce the obligation. Southwestern Life Ins. Co.
v. United States, 560 F.2d 627, 644 (5th Cir. 1977); Brewer v.
Commissioner, T.C. Memo. 1992-530; Suman v. Commissioner, T.C.
Memo. 1967-84. Petitioner's failure to attempt collection allows
the inference that the notes were already worthless in 1989,
1990, or 1991.
Real Estate Loans
Petitioner failed to produce evidence of identifiable events
that could fix the year of total worthlessness of his real estate
loans. In some instances, even if the year could be determined,
we are unable to determine what the amount of the loss might have
been because of partial collection in kind. The Daniels loan was
the subject of default, foreclosure, and nonsale at foreclosure
2The stipulation by the parties recites an unlikely
chronology: That petitioner received notices from mechanics
lienors in 1992 and that petitioner permitted the liens to be
foreclosed on the cars in 1991.
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