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the failure of PLG, and took no salary for his position with PLG.
See United States v. Generes, supra at 103 (considering the ratio
of salary to debt amount a significant factor to find business
purpose for an employee loan).
A taxpayer may claim a business loss in situations in which
the taxpayer’s activities in making loans have been regarded as
so extensive and continuous as to elevate that activity to the
status of a separate business. Rollins v. Commissioner, 32 T.C.
604, 613 (1959), affd. 276 F.2d 368 (4th Cir. 1960); Barish v.
Commissioner, 31 T.C. 1280, 1286 (1959); Estate of Palmer v.
Commissioner, 17 T.C. 702 (1951). Yet, petitioner presented no
evidence that his activity in that respect was extensive enough
to constitute a separate business. We also find it significant
that petitioner did not charge enough interest to create any
lender profit margin and maintained no documentation on the
advance he made.
Having considered the record herein in light of the above
criteria, we conclude that petitioner did not make the advance to
PLG in furtherance of his trade or business; he was not in the
business of lending money, nor did he make the advance in order
to preserve a salary from PLG. Petitioner is not entitled to a
business bad debt deduction under section 166.
In light of the foregoing,
Decision will be entered for
respondent.
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