Eric L. and Kay K. Jones - Page 8

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            guaranty to be proximately related to the taxpayer's trade or                             
            business.  Putoma Corp. v. Commissioner, 66 T.C. 652, 673 (1976),                         
            affd. 601 F.2d 734 (5th Cir. 1979); see United States v. Generes,                         
            supra.                                                                                    
                  A motive is business related when the taxpayer seeks to                             
            increase or protect the taxpayer's salary to be paid from the                             
            debtor corporation.  Putoma Corp. v. Commissioner, supra at 674.                          
            A motive is investment related when the taxpayer aims to increase                         
            or protect the value of the taxpayer's stock in the debtor                                
            corporation.  See United States v. Generes, supra; Weber v.                               
            Commissioner, supra.  In deciding the taxpayer's motive for                               
            purposes of section 166, however, we examine the objective facts                          
            surrounding the loans rather than the taxpayer's subjective                               
            intent.  Kelson v. United States, 503 F.2d 1291, 1293 (10th Cir.                          
            1974) (citing United States v. Generes, supra).                                           
                  Characterization of an advance as either a loan or capital                          
            contribution is a question of fact which must be answered by                              
            reference to all of the evidence, with the burden on the taxpayer                         
            to establish that the alleged loans were bona fide debt.  Rule                            
            142(a); Dixie Dairies Corp. v. Commissioner, 74 T.C. 476, 493                             
            (1980); Yale Ave. Corp. v. Commissioner, 58 T.C. 1062, 1073-1074                          
            (1972).  Objective factors are to be considered, and the                                  
            taxpayer's subjective intent alone is not determinative of the                            
            issue of characterizing an advance as debt or equity.  United                             
            States v. Uneco, Inc. (In re Uneco, Inc.), supra at 1209.                                 




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