Lee D. Froehlich - Page 23

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          protect one's employment or salary.  Weber v. Commissioner, T.C.            
          Memo. 1994-341.  "[I]t must be clear from the record that the               
          primary reason for making the advances which gave rise to the               
          debts was business related rather than investment related".                 
          Smith v. Commissioner, 60 T.C. 316, 319 (1973).                             
               Generally, returns from investing result from appreciation             
          and earnings on the investment rather than from personal effort             
          or labor.  United States v. Generes, supra at 100-101.                      
          Conversely, one's role or status as an employee is a business               
          interest.  It typically involves the exertion of effort and labor           
          in exchange for a salary.  Id.; see also Litwin v. United States,           
          983 F.2d 997 (10th Cir. 1993); Smartt v. Commissioner, supra.               
               If the dominant motive was to increase the value of                    
          petitioner's stock in the auto dealership, then the loan was a              
          nonbusiness investment.  If the dominant motive was to increase             
          or protect the taxpayer's salary, then the loan was a business              
          debt.  If both outcomes occurred, then a consideration of all of            
          the relevant facts, emphasizing the objective factors and giving            
          controlling weight to no one single factor (the Generes                     
          approach), should be utilized.  Litwin v. United States, supra;             
          Smartt v. Commissioner, supra.                                              
               Respondent has conceded that the $400,000 business bad-debt            
          deduction claimed on petitioner's 1990 Federal income tax return            
          arises from the $400,000 payment on the floor plan loan, which is           





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