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affd. sub nom. Gibbons v. Commissioner, 155 F.3d 558 (4th Cir.
1998).
B. Bad Debt Deductions
Petitioner alleges that he made a portion of the payments to
TCB as guarantor of real estate construction loans to Payne &
Potter, Inc., which, because of its insolvent state, was in
default. Petitioner alleges that the bad debt deductions
($14,000 for 1989 and $8,000 for 1990) arose out of the
worthlessness of his right of recoupment against Payne & Potter,
Inc. Here again, respondent has denied the deductions for lack
of substantiation.
The parties have stipulated that petitioner paid $34,443 in
1989 and $13,644 in 1990 to TCB. Petitioner alleges that he paid
$14,000 in 1989 and $8,000 in 1990 to discharge his obligation as
the guarantor of construction loans by TCB to Payne & Potter,
Inc., which had become insolvent in 1986 and had defaulted on the
loans. Because of his inability to recoup from Payne & Potter,
Inc., the amount of those payments to TCB, petitioner claims that
he is entitled to bad debt deductions of $14,000 and $8,000 for
1989 and 1990, respectively.
Petitioner has failed to corroborate his oral testimony with
written evidence of any loan (or loans) by TCB to Payne & Potter,
Inc., or of any agreement whereby he became the guarantor of such
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