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proving that no genuine issue of material fact exists, and the
moving party is entitled to judgment as a matter of law.
Rauenhorst v. Commissioner, 119 T.C. 157, 162 (2002).
Section 166(a) allows a deduction for bad debts.5 The basis
for determining the amount of the deduction for any bad debt is
the adjusted basis provided in section 1011 for determining the
loss from the sale or other disposition of property. Sec.
166(b).6 Section 1.166-6, Income Tax Regs., provides specific
rules for bad debts which are attributable to mortgaged or
pledged property. Section 1.166-6, Income Tax Regs., provides:
(a) Deficiency deductible as bad debts--(1)
Principal amount. If mortgaged or pledged property is
lawfully sold (whether to the creditor or another
purchaser) for less than the amount of the debt, and
the portion of the indebtedness remaining unsatisfied
5Sec. 166(a) provides:
SEC. 166(a). General Rule.--
(1) Wholly worthless debts.--There shall be
allowed as a deduction any debt which becomes worthless
within the taxable year.
(2) Partially worthless debts.--When satisfied
that a debt is recoverable only in part, the Secretary
may allow such debt, in an amount not in excess of the
part charged off within the taxable year, as a
deduction.
6Sec. 166(b) then provides:
SEC. 166(b). Amount of Deduction.--For purposes
of subsection (a), the basis for determining the amount
of the deduction for any bad debt shall be the adjusted
basis provided in section 1011 for determining the loss
from the sale or other disposition of property.
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