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however, at the beginning of the year in which the taxpayer takes
the deduction and lose its value by the end of that year. Sec.
166(a)(1); see also Dustin v. Commissioner, 53 T.C. 491, 501
(1969), affd. 467 F.2d 47 (9th Cir. 1972). Therefore, even
assuming arguendo that the debt was worthless because of Evans’
insolvency, the insolvency was not related to any identifiable
event in 1995. Additionally, petitioner’s argument that Evans’
insolvency rendered the loan uncollectible contradicts his
testimony that he expected Evans to “work his tail off” at the
Clinic to repay the loan, presumably from his salary, if the
companies failed.
Third, to qualify as worthless, not only must a debt be
uncollectible at the time the taxpayer takes the deduction, but
the taxpayer has the burden to show it also lacks future value.
Dustin v. Commissioner, supra; Peraino v. Commissioner, T.C.
Memo. 1982-524, affd. without published opinion 742 F.2d 1437 (2d
Cir. 1983). Evans’ age, educational status, income, and earning
potential are all relevant considerations in determining whether
the loan had future value. See Cole v. Commissioner, 871 F.2d
64, 67 (7th Cir. 1989), affg. T.C. Memo. 1987-228; Dustin v.
Commissioner, supra. Evans was in his forties in 1995 when the
deduction was taken, he had an M.B.A. from Vanderbilt University,
and he quickly found similar employment after leaving the Clinic.
These criteria lead us to conclude the loan had at least some
future value. Petitioner has not shown otherwise.
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