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Abstract: 

This article examines the availability of a deduction for a bad debt, with a specific focus on the distinctions between worthless securities and bad debts in the context of a simple promissory note issued by the taxpayer. The discussion reviews the law applicable to what might occur where a taxpayer attempts to take a deduction based on the “worthlessness” of the debt, while, at the same time, filing a lawsuit in the hope that the debt is not, in fact, completely worthless.

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Affiliations:  1: Pinnacle Law Group.