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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.
omitted.]
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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