William G. Allen, et al. v. Commissioner, T.C. Memo. 2023 -86 , Code Sec(s) 166. WILLIAM G. ALLEN, ET AL., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent, HUMBOLT INVESTMENTS, LLC, ALLEN FAMILY INVESTMENT TRUST U/A/D 12/1/03, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Case Information: [pg. 769] Code Sec(s): 166 Docket: Dkt. Nos. 28210-15, 31951-15. Date Issued: 07/11/2023. Judge: Opinion by Ashford, J. Tax Year(s): Years 2005, 2006, 2009. Disposition: Decision for Commissioner. HEADNOTE 1. Bad debt deductionsrelated entitiesdebt vs. equityproof. Tax Court determined that allegedly worthless advances to/between real estate developer's related entities weren't bona fide debt, and as such didn't qualify for bad debt deduction. Key factors included that although there were promissory notes with fixed maturity date, repayment was dependent on business success/successful lot sales. It was also telling that purported repayment right was never exercised; and fact that there were no interest payments and only inconsistent principal payments indicated there was no real expectation of repayment, and that advances instead were intended as equity