Larry M. Levy and Diane Levy - Page 7

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          parties’ agreement and conduct shall be closely scrutinized).               
          The inquiry is                                                              
               whether, considering all the facts--the agreement, the                 
               conduct of the parties in execution of its provisions,                 
               their statements, the testimony of disinterested                       
               persons, the relationship of the parties, their                        
               respective abilities and capital contributions, the                    
               actual control of income and the purposes for which it                 
               is used, and any other facts throwing light on their                   
               true intent--the parties in good faith and acting with                 
               a business purpose intended to join together in the                    
               present conduct of the enterprise. * * * [Commissioner                 
               v. Culbertson, 337 U.S. 733, 742 (1949); fn. ref.                      
               This was not a joint venture.  Larry Levy and Robert Levy              
          did not come together to make a profit.  The agreement merely               
          formalized the parties’ previous actions, where Larry Levy                  
          advanced money to JTFJ in exchange for an interest in the                   
          profits.  Moreover, the alleged joint venture did not transact              
          business, obtain a taxpayer identification number, file                     
          partnership tax returns, maintain bank accounts, or receive                 
          income or incur expenses.  Further, the parties to the agreement            
          did not report the pass-through of any income or loss.                      
          Accordingly, we conclude that the advances were not made through            
          a joint venture, and petitioners are not entitled to deduct them            
          as a loss on the worthlessness of a partnership interest.                   
          II. Bad Debt Deduction                                                      
               In the alternative, petitioners contend that they are                  
          entitled, pursuant to section 166, to a 1991 business bad debt              
          loss for their advances and payments on personal guaranties.                

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