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business bad debt under section 166(a).1 We hold that they are
not.
Background
The parties have stipulated some of the facts, which are
so found. The stipulated facts and the accompanying exhibits are
incorporated herein by this reference. When they filed their
petition, petitioners were married and resided in Hankinson,
North Dakota.
From about 1948 until 1984, petitioner earned his living as
a farmer. In 1984, he ceased farming and began to sell off the
more than 800 acres of farmland he had acquired during his years
of farming.
In the late 1970's, petitioner met Wayne Aaland (Aaland), a
contractor who built stores and motels. Together, they formed
several corporations, identified in the record as Magna
Development, Magna Realty, and American Energy (the
corporations). The corporations were formed for purposes that
included constructing and insulating homes. Petitioner received
a 20-percent interest in each of the corporations.
Upon forming the corporations and periodically thereafter
until about 1990, petitioner advanced money for the business
enterprises with Aaland. These advances are evidenced in the
record by copies of some 21 promissory notes, all but one of
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue.
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