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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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