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101. Its typical nature is the exertion of effort and labor in
exchange for a salary. Id. Therefore, in order to show that a
loss is created or acquired in connection with a trade or
business, the taxpayer must show that the loan was made either to
protect the employment of the taxpayer or as part of an
established business of financing corporations. Bernstein v.
Commissioner, T.C. Memo. 1989-422 (citing Raymond v. United
States, 511 F.2d 185, 189 (6th Cir. 1975)).
In determining the dominant business or nonbusiness motive
of a shareholder lending money to a corporation in which the
shareholder is also an employee, courts look primarily to three
objective factors: The amount of the loan with the taxpayer's
investment in the corporation, the amount of the taxpayer's
after-tax salary, and other sources of gross income available to
the taxpayer at the time of the loan. United States v. Generes,
supra; Scifo v. Commissioner, 68 T.C. 714, 723 (1977); Shinefeld
v. Commissioner, 65 T.C. 1092 (1976). The larger the taxpayer's
investment, the smaller his salary, and the larger his other
sources of gross income, the more likely the courts are to find a
dominant nonbusiness motive for the loan. United States v.
Generes, supra.
On this issue, as to whether the debt constituted a business
or nonbusiness bad debt, the record is clear that petitioner was
not in the business of lending money to corporations. Therefore,
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