Ernst L. Meier - Page 19




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          McKay v. Commissioner, 89 T.C. 1063, 1069 (1987), affd. 886 F.2d            
          1237 (9th Cir. 1989); Wichita Terminal Elevator Co. v.                      
          Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162 F.2d 513 (10th            
          Cir. 1947).                                                                 
               Petitioner argues that he reasonably expected repayment of             
          the full $3,545,020 he transferred to Blackland between 1993 and            
          1995, plus interest, that the funds were transferred by him to              
          Blackland based on a valid debtor-creditor relationship and on an           
          enforceable debt obligation of Blackland, that the loans to                 
          Blackland became worthless in 1995, and, therefore, that he                 
          should be entitled to the $3,207,578 claimed bad debt deduction             
          for 1995.                                                                   
               Respondent argues that petitioner has neither proved that              
          the funds petitioner transferred to Blackland between 1993 and              
          1995 represented valid loans nor that the purported loans became            
          worthless by December 31, 1995.                                             
               At the outset, we emphasize that the funds Blackland                   
          transferred to the tenant farmers are not in dispute.  Respondent           
          has not challenged the loan characterization thereof.  At issue             
          are only the funds petitioner transferred to Blackland.  With               
          regard thereto, we agree with both of respondent’s arguments.               
          The credible evidence before us is inadequate to establish that             
          the funds petitioner transferred to Blackland constituted valid             








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