Litowitz v. The Queen, 2005 DTC 1469, 2005 TCC 557 -- summary under Subsection 50(1)

In finding that the taxpayer had realized an allowable business investment loss with respect to an advance owing to him, Bowman C.J. noted (at p. 1472) that although the assessor, in concluding that the debt had not become bad, had approached the question carefully and conscientiously, the assessor obviously was substituting his judgment for that of the taxpayer, and the judgment of the taxpayer in the matter was one that a reasonable person would make in the circumstances. Furthermore, the fact that five years later the taxpayer ultimately collected on the debt did not establish that it was not a bad debt in the taxation year in question. "One should, in general, not apply the wisdom of hindsight in determining whether a debt is bad at a particular point in time." (p. 1472).