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OPINION
Bad Debt Deductions3
We review for an abuse of discretion respondent’s
determinations under section 166(a)(2) to disallow deductions for
debts claimed to be partially worthless, and respondent’s
determinations in that regard will not be disturbed unless
plainly arbitrary or unreasonable. Brimberry v. Commissioner,
588 F.2d 975, 977 (5th Cir. 1979), affg. T.C. Memo. 1976-209;
Austin Co. v. Commissioner, 71 T.C. 955, 971 (1979) (citing
Findley v. Commissioner, 25 T.C. 311, 319 (1955), affd. per
curiam 236 F.2d 959 (3d Cir. 1956)).
Generally, to be entitled to deductions under section
166(a)(2) for debts claimed to be partially worthless, taxpayers
have the burden of proving that, based on all the facts and
circumstances, the portion of the debts with respect to which the
deductions are claimed became unrecoverable by the end of the
year for which the deductions are claimed. Austin Co. v.
Commissioner, supra at 971; Portland Manufacturing Co. v.
Commissioner, 56 T.C. 58, 73 (1971), affd. without published
opinion 35 AFTR 2d 75-1439, 75-1 USTC par. 9449 (9th Cir. 1975).
3 The parties treat and brief the issue as to the allowability
of petitioners’ claimed bad debt deductions relating to the
automobile loans under the bad debt provisions of sec. 166. No
claim is made that the claimed deductions should be allowed under
the loss provisions of sec. 165.
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