-15-
with a trade or business or (B) a debt, "the loss from the
worthlessness of which is incurred in the taxpayer's trade or
business."
We must therefore decide the nature of petitioner's
relationship with Ms. Jackson and/or her corporate entity; i.e.,
whether he was a joint venturer, creditor, investor, stockholder,
etc. Petitioner contends that he was a joint venturer. As a
guide to answering this type of question, courts have focused
generally on whether the parties intended to and did join
together for the accomplishment of a specific enterprise.
Commissioner v. Culbertson, 337 U.S. 733 (1949). Some of the
factors to be considered are set forth in the following oft-
quoted language of Luna v. Commissioner, 42 T.C. 1067, 1077-1078
(1964):
The agreement of the parties and their conduct in
executing its terms; the contributions, if any, which
each party has made to the venture; the parties’
control over income and capital and the right of each
to make withdrawals; whether each party was a principal
and coproprietor, sharing a mutual proprietary interest
in the net profits and having an obligation to share
losses, or whether one party was the agent or employee
of the other, receiving for his services contingent
compensation in the form of a percentage of income;
whether business was conducted in the joint names of
the parties; whether the parties filed Federal
partnership returns or otherwise represented to
respondent or to persons with whom they dealt that they
were joint venturers; whether separate books of account
were maintained for the venture; and whether the
parties exercised mutual control over and assumed
mutual responsibilities for the enterprise.
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011