- 12 -12
cannot believe that Glenn Peterson would have signed a guarantee
for $300,000 to protect a nominal salary. Garner v.
Commissioner, 987 F.2d 267, 272-273 (5th Cir. 1993), affg. T.C.
Memo. 1991-569. In this connection, we think it significant that
petitioners reported substantial amounts of "wages, salaries,
tips, etc." as ordinary income on their 1988 and 1989 returns.
This fact, coupled with the conceded nominal salary drawn from
Dutchess, points in the direction that Glenn Peterson's main
purpose was not to draw salary as an employee of Dutchess, but to
realize capital appreciation as a shareholder by way of the
hoped-for profitable operation of Dutchess. Indeed, petitioners
recognize the multiple nature of Glenn Peterson's role when they
repeatedly refer on brief to his status as an
"employee/officer/shareholder".
In any event, under the foregoing circumstances, the record
is insufficient to satisfy petitioners' burden of proof that
protection of Glenn Peterson's employment status was the dominant
motive for financing the guarantee. Eisenberg v. Commissioner,
supra at 349; Shinefeld v. Commissioner, supra at 1099. We
conclude that Glenn Peterson signed the guarantee in his capacity
as a shareholder, and therefore, if the payment represented debt
instead of a contribution to capital, petitioners would have been
entitled to a nonbusiness bad debt deduction, which would have
given rise to a short-term capital loss, subject to the
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