- 16 -
Estate v. Commissioner, 216 F.2d 548, 549-50 (10th Cir. 1954),
affg. a Memorandum Opinion of this Court.
A taxpayer must generally show that identifiable events
occurred to render the debt worthless during the year in which
the taxpayer claimed the deduction. Am. Offshore, Inc. v.
Commissioner, 97 T.C. 579, 593 (1991). Some objective factors
include declines in the value of property securing the debt, the
debtor’s earning capacity, events of default, the obligor’s
refusal to pay, actions the obligee took to pursue collection,
subsequent dealings between the obligee and obligor, and the
debtor’s lack of assets. Id. at 594. No single factor is
conclusive. Id.
Petitioner has shown that a series of specific, identifiable
events occurred during 1995 that, when taken together, rendered
the Properties loan worthless. See id. at 593. The most
important of these events was the failure of the expected source
for repayment of the Properties loan, the G&K purchase. Bottlers
anticipated that Properties would own the bottling facilities for
only a short time while G&K prepared to buy them. When G&K could
no longer buy the facilities, the structure became untenable.
Another event that contributed to the worthlessness of the
Properties loan was that Bottlers opted not to pay Properties a
portion of the rent for valid business reasons, rendering it
impossible for Properties to pay Bottlers the principal on the
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011