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portions of loans it had made to employees where the deductions
were taken because the employees had left the company.6
Southwestern Life Ins. v. United States, 560 F.2d 627, 644 (5th
Cir. 1977). Similarly, we find Evans’ job termination alone
insufficient to render petitioner’s debt wholly worthless.
Whether the Loan Had Future Value
Petitioner also argues that the loan was worthless, as a
general matter, because Evans was insolvent. Petitioner
testified that Evans had no significant assets during the entire
8-year period he was employed by the Clinic and, consequently,
his chance of collecting his debt from Evans in the future was
“incredibly remote”. We disagree.
First, we note that insolvency alone does not render a debt
worthless. See Roth Steel Tube Co. v. Commissioner, 620 F.2d
1176, 1182 (6th Cir. 1980) (insolvency is merely an indicium of
uncollectibility), affg. 68 T.C. 213 (1977); see also Buchanan v.
United States, 87 F.3d 197, 200 (7th Cir. 1996) (a debt is not
worthless merely because the debtor is insolvent); Roussel v.
Commissioner, 37 T.C. 235, 245 (1961) (insolvency alone does not,
of itself, demonstrate worthlessness of a debt).
Second, as respondent correctly points out, if Evans’
alleged longstanding insolvency rendered the loan worthless, then
the loan was worthless before 1995. A loan must have value,
6As part of its holding, the court also found that the
insurance company should have made some attempt to enforce
collection. Southwestern Life Ins. v. United States, 560 F.2d
627, 644 (5th Cir. 1977).
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