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the funds after 1993. Petitioner continued to discuss business
opportunities with Mr. Jasbon in 1994 and 1996.
We cannot conclude that there were any events which occurred
in 1997 that created some certainty as to lack of repayment or
reimbursement by Mr. Jasbon. Petitioner has not presented
sufficient evidence that would cause us to conclude that it
became a reasonable certainty in 1997 that there was no prospect
of reimbursement. See Halliburton Co. v. Commissioner, 93 T.C.
758, 770 (1989), affd. 946 F.2d 395 (5th Cir. 1991); Colish v.
Commissioner, 48 T.C. 711, 715 (1967); sec. 1.165-1(d)(2)(i),
Income Tax Regs. (whether a reasonable prospect of recovery
exists is a question of fact).
We now consider whether petitioners are entitled to a bad
debt deduction, treating the advance as a loan to ITG or to Mr.
Jasbon. Section 166(a) generally allows a deduction for any debt
that becomes worthless during the taxable year. Bad debts may be
characterized as either business bad debts or nonbusiness bad
debts. Sec. 166(d). Section 166(d)(1)(B) provides that
nonbusiness bad debts are deductible as short-term capital
losses. A bad debt is characterized as a business bad debt if it
is incurred in connection with a trade or business of the
taxpayer. Sec. 166(d)(2).
Petitioner did not provide evidence that he was in the
business of lending money to individuals or that there are any
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