- 7 - petitioners must prove (1) a bona fide debt existed between them and Search2000, and (2) the debt became worthless in 1997, the year in which they claimed the deduction. See also Dixie Dairies v. Commissioner, 74 T.C. 476, 493-494 (1980); Kim v. Commissioner, T.C. Memo. 1995-598; Hotel Continental, Inc. v. 5(...continued) part charged off within the taxable year, as a deduction. (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. (d) Nonbusiness Debts.-- (1) General rule.-–In the case of a taxpayer other than a corporation–- (A) subsection (a) shall not apply to any nonbusiness debt; and (B) where any nonbusiness debt becomes worthless within the taxable year, the loss resulting therefrom shall be considered a loss from the sale or exchange, during the taxable year, of a capital asset held for not more than 1 year. (2) Nonbusiness debt defined.-–For purposes of paragraph (1), the term “nonbusiness debt” means a debt other than– (A) a debt created or acquired (as the case may be) in connection with a trade or business of the taxpayer; or (B) a debt the loss from the worthlessness of which is incurred in the taxpayer’s trade or business.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011