William J. Fleischaker and Donni L. Fleischaker - Page 25

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          corporation had become established.  Petitioner guaranteed Adult             
          Living Centers' loans so that the corporation could build its                
          facilities and cover operating expenses.  He intended to profit              
          from his long-term stock ownership in the corporation.                       
          Petitioner hoped to profit from owning multiple nursing home                 
          facilities throughout the country using different corporations               
          under his control.  Petitioner intended to keep control of the               
          corporations.  He did not organize Adult Living Centers or intend            
          to organize other future corporations with a view to a quick and             
          profitable sale after each business had become established.  See             
          Millsap v. Commissioner, 46 T.C. 751 (1966), affd. 387 F.2d 420              
          (8th Cir. 1968); see also Smith v. Commissioner, 62 T.C. 263                 
          (1974); Schwartz v. Commissioner, T.C. Memo. 1964-247; cf. Farrar            
          v. Commissioner, supra.                                                      
               We find that petitioner was not in the trade or business of             
          developing, promoting, and selling businesses.  Thus, petitioner             
          may not deduct as a business bad debt the payments attributable              
          to the discharge of his guaranties and may not deduct as ordinary            
          and necessary business expenses the legal fees incurred in                   
          defending against enforcement of those guaranties.                           
          Issue 2.  Whether petitioners are liable for the accuracy-related            
          penalties under section 6662 for 1991 and 1992                               
               Respondent determined that petitioners are liable for                   
          accuracy-related penalties under section 6662(a) and (b)(2) for              

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