Lee D. Froehlich - Page 24

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          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, not           







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