Using Research Problem 1 prepare a memo to the tax files to address the possibility of a bad debt deduction.

Research Problem 1. During 2021, your client, Kendra Adams, was the chief executive officer and a shareholder of Maze, Inc. She owned 60% of the outstanding stock of Maze. In 2018, Kendra and Maze, as co-borrowers, obtained a $100,000 loan from United National Bank. This loan was secured by Kendra's personal residence. Although Maze was listed as a co-borrower, Kendra repaid the loan in full in 2021. On Maze's Form 1120 tax returns, no loans from shareholders were reported. Discuss whether Kendra is entitled to a bad debt deduction for the amount of the payment on the loan. Partial list of research aids: U.S. v. Generes, 405 U.S. 93 (1972). Dale H. Sundby, T.C.Memo. 2003-204. Arrigoni v. Comm., 73 T.C. 792 (1980). Estate of Herbert M. Rapoport, T.C.Memo. 1982-584. Clifford L. Brody and Barbara J. DeClerk, T.C. Summary Opinion, 2004-149. Research Problem 1. During 2021, your client, Kendra Adams, was the chief executive officer and a shareholder of Maze, Inc. She owned 60% of the outstanding stock of Maze. In 2018, Kendra and Maze, as co-borrowers, obtained a $100,000 loan from United National Bank. This loan was secured by Kendra's personal residence. Although Maze was listed as a co-borrower, Kendra repaid the loan in full in 2021. On Maze's Form 1120 tax returns, no loans from shareholders were reported. Discuss whether Kendra is entitled to a bad debt deduction for the amount of the payment on the loan. Partial list of research aids: U.S. v. Generes, 405 U.S. 93 (1972). Dale H. Sundby, T.C.Memo. 2003-204. Arrigoni v. Comm., 73 T.C. 792 (1980). Estate of Herbert M. Rapoport, T.C.Memo. 1982-584. Clifford L. Brody and Barbara J. DeClerk, T.C. Summary Opinion, 2004-149