William J. Fleischaker and Donni L. Fleischaker - Page 22

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          related.  We turn, therefore, to an examination of whether                   
          petitioner’s involvement with Adult Living Centers qualified as a            
          trade or business within the meaning of either section 166 or                
               In Whipple v. Commissioner, 373 U.S. 193 (1963), the Supreme            
          Court held that the taxpayer's advances to one of a number of                
          corporations he owned did not result in business bad debts,                  
          because the advances were not sufficiently related to the                    
          taxpayer's trade or business (as opposed to the trade or business            
          of the taxpayer's corporation).  In Whipple v. Commissioner,                 
          supra at 202, the Supreme Court stated:                                      
                    Devoting one's time and energies to the affairs of                 
               a corporation is not of itself, and without more, a                     
               trade or business of the person so engaged.  Though                     
               such activities may produce income, profit or gain in                   
               the form of dividends or enhancement in the value of an                 
               investment, this return is distinctive to the process                   
               of investing and is generated by the successful                         
               operation of the corporation’s business as                              
               distinguished from the trade or business of the                         
               taxpayer himself.  When the only return is that of an                   
               investor, the taxpayer has not satisfied his burden of                  
               demonstrating that he is engaged in a trade or business                 
               since investing is not a trade or business and the                      
               return to the taxpayer, though substantially the                        
               product of his services, legally arises not from his                    
               own trade or business but from that of the corporation.                 
               Even if the taxpayer demonstrates an independent trade                  
               or business of his own, care must be taken to                           
               distinguish bad debt losses arising from his own                        
               business and those actually arising from activities                     
               peculiar to an investor concerned with, and                             
               participating in, the conduct of the corporate                          

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