Allen C. Chamberlin and Martha L. Chamberlin - Page 23

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               In Whipple v. Commissioner, 373 U.S. 193 (1963), the Supreme           
          Court determined whether loans made by a shareholder to a                   
          corporation, in which he held a substantial interest, were                  
          deductible as business bad debts.  In holding that the debts were           
          not incurred in a trade or business of the taxpayer, the Supreme            
          Court stated:                                                               
                    Devoting one’s time and energies to the affairs of                
               a corporation is not of itself, and without more, a                    
               trade or business of the person so engaged.  Though                    
               such activities may produce income, profit or gain in                  
               the form of dividends or enhancement in the value of an                
               investment, this return is distinctive to the process                  
               of investing and is generated by the successful                        
               operation of the corporation’s business as                             
               distinguished from the trade or business of the                        
               taxpayer himself.  When the only return is that of an                  
               investor, the taxpayer has not satisfied his burden of                 
               demonstrating that he is engaged in a trade or business                
               since investing is not a trade or business and the                     
               return to the taxpayer, though substantially the                       
               product of his services, legally arises not from his                   
               own trade or business but from that of the corporation.                
               Even if the taxpayer demonstrates an independent trade                 
               or business of his own, care must be taken to                          
               distinguish bad debt losses arising from his own                       
               business and those actually arising from activities                    
               peculiar to an investor concerned with, and                            
               participating in, the conduct of the corporate                         
                    If full-time service to one corporation does not                  
               alone amount to a trade or business, which it does not,                
               it is difficult to understand how the same service to                  
               many corporations would suffice.  To be sure, the                      
               presence of more than one corporation might lend                       
               support to a finding that the taxpayer was engaged in a                
               regular course of promoting corporations for a fee or                  
               commission, * * * or for a profit on their sale, * * *                 
               but in such cases there is compensation other than the                 
               normal investor’s return, income received directly for                 

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