Melvin J. Cole and Harriet L. Cole v. Commissioner of Internal Revenue

HARLINGTON WOOD, Jr., Circuit Judge.

The Internal Revenue Service (“IRS”) audited Melvin J. and Harriet L. Cole’s income tax returns for 1979 and 1980 and disallowed certain deductions. A notice of deficiency was issued on January 11, 1984. The Coles filed a petition with the United States Tax Court contesting the deficiency determination. They also requested permission to amend their 1979 or 1980 tax return to claim a $50,000 bad debt deduction. The disagreement over the original deductions was eventually settled, but this last issue — whether the Coles were entitled to a bad debt deduction —…