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debt is worthless and uncollectible and that legal action to
enforce payment would in all probability not result in the
satisfaction of execution on a judgment, a showing of these facts
will be sufficient evidence of the worthlessness of the debt.”
Sec. 1.166-2(b), Income Tax Regs. No deduction is allowed for a
debt so long as any part of the debt is recoverable during the
taxable year. Sec. 1.166-5(a)(2), Income Tax Regs.
Petitioner contends that he has a valid and enforceable
claim against Ms. Thiellesen under the equitable doctrine of
unjust enrichment, and that this claim was wholly worthless in
the year 2000.11 On the other hand, respondent contends that
petitioner only has an unadjudicated and unliquidated claim
against Ms. Thiellesen because he failed to obtain a judgment
against her.12 Respondent further contends that, if the Court
finds that petitioner has a legal claim against Ms. Thiellesen,
the claim was not wholly worthless because petitioner could
recover the truck from Ms. Thiellesen under a constructive
11 Petitioner seeks restitution on the basis of unjust
enrichment, which is a form of equitable relief. See Dumas v.
Auto Club Ins. Association, 473 N.W.2d 652, 663 (Mich. 1991);
Restatement, Restitution, sec. 1 (1937).
12 Generally, a claim arising out of a breach of contract,
prior to being reduced to judgment, does not create such a
debtor-creditor relationship because the injured party has only
an unliquidated claim for damages. Lewellyn v. Elec. Reduction
Co., 275 U.S. 243, 246 (1927); Proesel v. Commissioner, 77 T.C.
992, 1002 (1981) (and cases cited therein).
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