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business debt if it is proximately related to a taxpayer's trade
or business. Sec. 1.166-5(b), Income Tax Regs.; see Putoma
Corp. v. Commissioner, 66 T.C. 652, 673 (1976), affd. 601 F.2d
734 (5th Cir. 1979). To illustrate, if the dominant motivation
of a person in making a loan to a corporation of which he is both
a stockholder and an employee is to secure such person's employ-
ment, and not to preserve such person's investment, the loan will
be considered a business debt. See Garner v. Commissioner, 987
F.2d 267, 269 (5th Cir. 1993), affg. T.C. Memo. 1991-569.
Mr. Morris testified that the purpose of the Galt loan was
to assist Galt Communications in the early stages of its opera-
tions by providing it with money with which to pay its business
expenses. He further testified, and we have found, that although
he was not an employee of that company at the time he made the
Galt loan, he hoped to secure future employment with it by making
the loan at issue. Mr. Morris also testified that he believed
that that loan was a business loan. Although Mr. Morris' testi-
mony is insufficient to establish what his dominant motivation
was in making the Galt loan or whether his involvement with Galt
Communications constituted a trade or business, it does show that
some basis existed for believing that that loan was made primar-
ily for business, and not investment, purposes. Accordingly, we
find that there was some basis in fact and law to claim a deduc-
tion for the worthless Galt loan.
With respect to the claimed deduction for legal expenses
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