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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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