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Respondent argues that there was no “debt” that would
qualify for the bad debt deduction. In particular, respondent
contends that petitioner did not show that he was entitled to
reimbursement for the various expenses at issue.
Respondent asserts that a precondition for obtaining out-of-
pocket expenses from Kirshner Global was not fulfilled in that
petitioner failed to show that he obtained interim financing
within the time period specified in the 1995 venture agreement.
At trial, petitioner claimed that his entitlement to
reimbursement for expenses was not contingent on obtaining
interim financing.
The totality of the record satisfies the Court that
respondent is correct. There is no documentation or other
evidence that establishes the existence of a bona fide debt owing
to petitioner by either Kirshner Global or Kirshner Content
(petitioner’s Schedule C activity) that qualified for a bad debt
deduction. Also, there is no evidence to support a finding that
petitioner was contractually entitled to be reimbursed for the
various Kirshner expenses that are characterized as a bad debt on
Schedule C of petitioner’s tax return.
With respect to Kirshner Global, the language of the venture
agreement supports respondent’s position. In a subsection
entitled “Interim Financing”, Kirshner Global was required,
through the Equisource Group, to obtain interim financing that
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