- 8 - repayment (as well as the absence of any form of security) tends to refute the existence of a valid debtor-creditor relationship. Petitioner's testimony regarding the notes was not consistent with the weight of the objective evidence in this case. Based on the record as a whole, we conclude that there was no expectation of repayment, and that the advances do not constitute bona fide loans.4 Securities Transactions Respondent also determined that petitioner was not a "dealer" regarding securities transactions because he had no customers, and therefore the net losses James Trading realized in 1992 were subject to the capital loss limitations of sections 165(f) and 1211(b). Petitioner claims that he was engaged in a trade or business because he had a reasonable expectation of earning a profit. Petitioner further contends that he was either a "dealer" or "trader" regarding securities transactions in 1992 and thus seeks ordinary loss treatment for the net losses incurred during 1992. Section 165(a) generally provides a deduction for any loss sustained during the taxable year and not compensated by insurance or otherwise. Section 165(f), however, provides that losses from the sale of capital assets shall be allowed only to 4 Consequently, we need not decide whether any debt would have been a business or nonbusiness debt.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
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