William King Alt and Barbara G. Alt - Page 7

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               The Court is satisfied that a genuine debtor/creditor                  
          relationship existed in this case between petitioners and their             
          son, Michael.  That conclusion is fortified by petitioners’                 
          concurrent advance to Michael of $42,000, and their candid                  
          testimony at trial that they never expected repayment of that               
          amount but fully expected repayment of the $55,000.  They                   
          followed the advice of their attorney to have the $55,000 advance           
          documented by execution of a promissory note by their son.  The             
          evidence does not support respondent’s contention that the                  
          $55,000 note did not constitute a valid debt simply because the             
          note did not provide a repayment schedule, had no maturity date,            
          and no default provisions.  The Court construes the note as a               
          valid, legal, enforceable obligation that was due on demand.  The           
          Court further concludes that there was a debtor/creditor                    
          relationship between petitioners and Michael.  Accordingly,                 
          petitioners are entitled to a nonbusiness bad debt deduction                
          pursuant to section 166(d).                                                 
               Reviewed and adopted as the report of the Small Tax Case               

          Decision will be entered                                                    
          for petitioners.                                                            

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