Kenneth B. and Linda R. Satlin - Page 14

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          worthless in the year that the deduction is claimed.  Rule                  
          142(a); Am. Offshore, Inc. v. Commissioner, 97 T.C. 579, 593                
          (1991); sec. 1.166-1(c), Income Tax Regs.  A bona fide debt is              
          defined as one which arises from a debtor-creditor relationship             
          and which is based upon a valid and enforceable obligation to pay           
          a fixed or determinable sum of money.  Sec. 1.166-1(c), Income              
          Tax Regs.                                                                   
               The question of whether a debt has become worthless is one             
          of fact, to be determined by an examination of all surrounding              
          facts and circumstances.  Am. Offshore, Inc. v. Commissioner,               
          supra at 594.                                                               
               A taxpayer may establish the worthlessness of a debt by                
          offering proof of identifiable events which establish that the              
          debt will not be paid in the future.  Therefore, a taxpayer’s               
          subjective opinion that a debt is uncollectible, standing alone,            
          is not sufficient evidence that the debt is worthless.  Fox v.              
          Commissioner, 50 T.C. 813, 822 (1968), affd. per curiam per order           
          25 AFTR 2d 70-891, 70-1 USTC par. 9373 (9th Cir. 1970).                     
               Among the objective factors considered by courts to                    
          determine worthlessness are:  The debtor’s earning capacity;                
          events of default, whether major or minor; insolvency of the                
          debtor; the debtor’s refusal to pay; actions of the creditor in             
          pursuing collection, i.e., whether the creditor failed to take              
          collection action before claiming the deduction; subsequent                 






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