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(5th Cir. 1974); Haber v. Commissioner, 52 T.C. 255, 266 (1969),
affd. 422 F.2d 198 (5th Cir. 1970).
The unexplained inconsistencies in not reporting the
outstanding loans as due from petitioners on the corporate tax
returns and on the bankruptcy schedules filed by Mayflower and by
Jordan contradict the formality of the notes. There is no
evidence that there was ever any effort to repay the advances,
and no payments in fact were made. There is no indication that
petitioners had the ability to repay the advances, and the
evidence and petitioners’ arguments suggest that in fact they did
not have the ability to repay the advances. We conclude on the
evidence presented that the advances were taxable distributions
to petitioners rather than bona fide loans.
Fishing Activities
The first of respondent’s alternative grounds for
disallowing deductions claimed in relation to the fishing
activities operated through the S corporations Billfish and Texas
Terrors is the absence of the requisite profit objective within
the meaning of section 183. A determination of whether the
requisite profit objective exists is made on the basis of all of
the surrounding facts and circumstances. See sec. 1.183-2(b),
Income Tax Regs. Greater weight is given to the objective facts
than to the taxpayer’s mere statement of his intent. See sec.
1.183-2(a), Income Tax Regs.
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