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Virgin, 230 F.2d 880 (5th Cir. 1956). Section 166(d)(1)(A)
provides that in the case of a taxpayer other than a corporation,
section 166(a) shall not apply to any nonbusiness debt. Section
166(d)(2) defines a nonbusiness debt as “a debt other than--(A) a
debt created or acquired * * * in connection with a trade or
business of the taxpayer; or (B) a debt the loss from the
worthlessness of which is incurred in the taxpayer’s trade or
business.”
Whether a debt is a business debt or a nonbusiness debt is a
question of fact in each particular case. Sec. 1.166-5(b), Income
Tax Regs. In this regard, a debt must be proximately related to
the taxpayer’s conduct of a trade or business in order to
constitute a business debt. United States v. Generes, 405 U.S.
93 (1972); sec. 1.166-5(a)(2), Income Tax Regs. Whether a debt
bears a proximate relation to a taxpayer’s trade or business is
determined by the dominant motivation of the taxpayer in
incurring the debt. United States v. Generes, supra at 103. A
significant motivation is not sufficient. Id. If an employee’s
dominant motivation in making a loan to his employer is a desire
to preserve his position and salary at that company, the loan may
be a business loan. See Shinefeld v. Commissioner, 65 T.C. 1092
(1976). However, petitioner here has not demonstrated that the
loan was “necessary to keep his job or was otherwise proximately
related to maintaining his trade or business as an employee.”
Whipple v. Commissioner, 373 U.S. 193, 204 (1963). Petitioner
held a salaried position in a separate company, not threatened by
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