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when the payment is made. French v. United States, supra at
1248; Smartt v. Commissioner, supra; Modell v. Commissioner, T.C.
Memo. 1983-761; Cho v. Commissioner, T.C. Memo. 1976-318.6
Petitioner personally guaranteed payment of the entire floor plan
loan as early as July 31, 1988. The last record of an extension
of the guarantee, on October 15, 1989, however, reflects that
petitioner signed a promissory note to extend the floor plan loan
to December 1, 1989. We are unable to view the extension(s) of
the guarantee as a new commitment. As its nomenclature
indicates, an "extension" merely continues the original
obligation. Thus, petitioner's motivation with respect to the
floor plan arrangement is measured as of July 31, 1988.
1. Petitioner's Investment--Petitioner owned all the
outstanding stock of the corporate dealership. His total
contribution was composed of two amounts each approximating
$400,000. The first $400,000 was comprised of petitioner's
liquid assets of $250,000 and a $150,000 note.
In attempting to minimize the relative size of his
investment in the dealership, petitioner argues that it would not
6
The statute and the regulations do not
tell us at what point in time we should look
to determine proximity in a guaranty context.
* * * [Case precedent holds] that the time to
determine proximity is the time when
petitioner entered into his guarantee
agreements. [Cho v. Commissioner, T.C. Memo.
1976-318.]
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