- 7 -
through bookkeeping entries or testimony have limited
significance unless these labels are supported by objective
evidence. Fin Hay Realty Co. v. United States, supra at 697;
Dixie Dairies Corp. v. Commissioner, supra at 495.
Petitioner argues that the advances constituted bona fide
business loans that became worthless in 1992. Petitioner claims
he is therefore entitled to a business bad debt deduction in
1992. Respondent argues primarily that the advances did not
constitute a bona fide loan to James Trading and, therefore, that
petitioner should not be allowed a business bad debt deduction
under section 166. Alternatively, respondent argues that if any
portion of the advances constituted bona fide loans, that portion
should be treated as a nonbusiness debt that did not become
completely worthless in 1992. We agree with respondent's primary
argument.
The fact that repayment of the advances depended upon James
Trading's financial success indicates that the advances did not
constitute bona fide loans. See Stinnett's Pontiac Serv., Inc.
v. Commissioner, 730 F.2d 634, 639 (11th Cir. 1984), affg. T.C.
Memo. 1982-314; Estate of Mixon v. United States, 464 F.2d 394,
405 (5th Cir. 1972). Petitioner never demanded repayment of the
purported loans. We also find it significant that, in the
instant case, there was no repayment schedule or interest rate
stated on the face of the notes. Petitioner's failure to demand
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