- 24 - separate and distinct from any other $400,000 amount; i.e., the cap loan and the contributions, separately. Respondent also concedes that petitioner was in the business of being an auto dealership employee. However, respondent does not agree that petitioner's dominant motive at the time of the guarantee was related to any trade or business. Respondent argues that the guarantee was made to protect petitioner's investment in the auto dealership. A related issue concerns the appropriate timeframe within which to measure petitioner's motivation in guaranteeing the floor plan loan. Respondent asserts that petitioner's dominant motivation should be measured from the time when he last negotiated for an extension and personally guaranteed an extension for the floor plan loan in October 1989. Petitioner contends that the correct time was when the business opened in March 1987. Generally, a taxpayer's motivation is determined as of the date upon which the taxpayer made the guarantee rather than the date upon which a payment in discharge of liability as guarantor is made. Harsha v. United States, supra; French v. United States, supra; Smartt v. Commissioner, T.C. Memo. 1993-65. Specifically, the focus of inquiry on a taxpayer's dominant motivation is at the time the taxpayer incurs the obligation, notPage: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Next
Last modified: May 25, 2011