- 9 -
1997 Bad Debt Deduction
Petitioners claimed a $2,000 nonbusiness bad debt deduction
on their 1997 joint Federal income tax return. In general, there
is allowed as a deduction “any debt which becomes worthless
within the taxable year.” Sec. 166(a)(1). It is axiomatic that
such deductions, if otherwise allowable, are allowed to the
taxpayer to whom the debt is owed. In this case, it is clear
from petitioner’s presentation that the debt, if any, that forms
the basis of the bad debt deduction here in dispute was owed to
petitioner’s wholly owned corporation and not to petitioner. For
Federal income tax purposes, petitioner and that corporation are
separate entities, see Moline Props., Inc. v. Commissioner, 319
U.S. 436, 438-439 (1943), and petitioner is not entitled to
deductions that might otherwise be allowable to the corporation.
See Hewitt v. Commissioner, 47 T.C. 483, 488 (1967); Willits v.
Commissioner, T.C. Memo. 1999-230. Respondent’s disallowance of
the bad debt deduction claimed on petitioners’ 1997 return is
sustained.
1997 Miscellaneous Itemized Deductions
On a Schedule A included with their 1997 return, petitioners
claimed miscellaneous itemized deductions for unreimbursed
employee business expenses totaling $22,024 and job hunting
expenses of $3,000. The admittedly overstated unreimbursed
employee business expense deduction is, in large part,
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011