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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
property).
* * * * * * *
(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
shareholder.
* * * * * * *
(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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Last modified: May 25, 2011