Larry W. and Cynthia J/ Van Wyk - Page 6

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                              (B) has pledged property, other than property           
                         used in such activity, as security for such                  
                         borrowed amount (to the extent of the net fair               
                         market value of the taxpayer's interest in such              
                        *     *     *     *     *     *     *                         
                         (3) Certain borrowed amounts excluded.--                     
                              (A) In general.--Except to the extent                   
                         provided in regulations, for purposes of paragraph           
                         (1)(B), amounts borrowed shall not be considered             
                         to be at risk with respect to an activity if such            
                         amounts are borrowed from any person who has an              
                         interest in such activity or from a related person           
                         to a person (other than the taxpayer) having such            
                         an interest.                                                 
                              (B) Exceptions.--                                       
                                   (i) Interest as creditor.--Subparagraph            
                              (A) shall not apply to an interest as a                 
                              creditor in the activity.                               
                                   (ii) Interest as shareholder with                  
                              respect to amounts borrowed by corporation.--           
                              In the case of amounts borrowed by a                    
                              corporation from a shareholder, subparagraph            
                              (A) shall not apply to an interest as a                 
                        *     *     *     *     *     *     *                         
                    (c) Activities to Which Section Applies.--                        
                         (1) Types of activities.--This section applies to            
                    any taxpayer engaged in the activity of-- * * *                   
                              (B) farming (as defined in section 464(e)),             
                         * * *                                                        
          Section 465(b)(1)(A)                                                        
               Petitioners' first argument is that petitioner should be               
          considered at risk with respect to the loan pursuant to section             

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