- 10 -
The increase in value of stock is the type of capital increase
that suggests a nonbusiness motive. See Whipple v. Commissioner,
373 U.S. 193 (1963).
Petitioner and decedent argue further that their investment
in International Mining, a gold mining venture, is proximately
related to their business of subdividing and developing rental
real estate. We find that it is not. Petitioner and decedent
were merely investors in this corporation. Gold mining was not a
real estate venture of the type that would be considered to be
part of petitioners' trade or business. Mining is quite
different from general real estate ventures, and petitioners have
failed to put forth sufficient evidence such that we could
conclude that they engaged in a trade or business so broad as to
encompass mining.
"[I]nvesting is not a trade or business". Id. at 202. This
venture was an investment unrelated to petitioner's and dece-
dent's trade or business. Therefore, we hold that petitioner's
and decedent's loans to International Mining, which became
worthless, are nonbusiness bad debts within the meaning of
section 166(a).
Decision will be entered
under Rule 155.
Page: Previous 1 2 3 4 5 6 7 8 9 10
Last modified: May 25, 2011