Billie and Florence Lykins - Page 2

               After concessions by the parties, the issues remaining for             
          decision are: (1) Whether an advance by petitioner Billie Lykins            
          to Tag Coal Corp. was a loan or a capital contribution; and, if             
          the advance was a loan, (2) whether such advance was a "business"           
          or a "nonbusiness" debt within the meaning of section 166.                  
               Some of the facts have been stipulated, and they are so                
          found.  Petitioners resided in Versailles, Kentucky, at the time            
          that their petition was filed with the Court.                               
                                  FINDINGS OF FACT                                    
               Petitioner Billie Lykins (petitioner) grew up in eastern               
          Kentucky and has lived there for most of his life.  Petitioner              
          worked for the Kentucky State Police for 26 years until he                  
          retired in 1976.  After retiring from the State Police,                     
          petitioner spent a few months doing contract work for coal                  
          companies and then was appointed the U.S. Marshall for the                  
          Eastern District of Kentucky.                                               
               In or about 1981, after resigning his appointment as a                 
          marshall, petitioner began working for Coal Mack, a coal company.           
          Petitioner was in charge of the overall operations of the coal              
          company, including production, transportation, leasing, and                 
          settling labor disputes.                                                    
               Petitioner was very familiar with the coal mining industry             
          in eastern Kentucky and contemplated starting his own coal-                 
          related business.  Petitioner frequently talked with Michael                
          Templeman (Mr. Templeman), his stepson, about his desire to enter           

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