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See Fincher v. Commissioner, 105 T.C. 126, 136 (1995). A
nonbusiness bad debt is deductible as a short-term capital loss,
while a business debt is deductible as an ordinary loss. See
sec. 166.
Petitioners contend that, from 1978 until 1984, petitioner
was engaged in the trade or business of promoting business
ventures in the health care industry. Respondent argues that
petitioner’s dominant motive for acquiring and guaranteeing loans
for The Chamberlin Corp. was for investment purposes and that the
activities of petitioner with regard to his promotion of business
ventures do not rise to the level of a trade or business.
In order to be engaged in carrying on a trade or business,
the taxpayer must be involved in the activity with continuity and
regularity, and the taxpayer’s primary purpose for engaging in
the activity must be for income or profit. See Commissioner v.
Groetzinger, 480 U.S. 23, 35 (1987). Activities that are
sporadic do not qualify as a trade or business. See Polakis v.
Commissioner, 91 T.C. 660, 670-672 (1988). The management of
one’s own investments is not considered a trade or business no
matter how extensive or substantial the investment activities
might be. See King v. Commissioner, 89 T.C. 445, 458 (1987).
Resolution of this issue requires an examination of the facts of
each case. See Commissioner v. Groetzinger, supra at 36.
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