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year before it was a hundred and forty thousand. And
that was the reason for this loan. And I should be
allowed an ordinary loss on this.
Petitioner relies on Lundgren v. Commissioner, 376 F.2d 623 (9th
Cir. 1967), revg. T.C. Memo. 1965-314. In that case, however,
the taxpayer was independently in the business of selling timber.
Here, it was Mayflower, not petitioner, that was in the business
of selling insurance. The taxpayer in Lundgren did not claim
that the purpose of the loan was to protect his salary from a
corporation. See Dallas v. Commissioner, T.C. Memo. 1971-248;
cf. Jerich v. Commissioner, T.C. Memo. 1992-136; Brooks v.
Commissioner, T.C. Memo. 1990-259. Petitioner’s conclusory
testimony is not supported by objective facts.
Whether a debt is a business or nonbusiness debt depends on
whether it is “proximately related” to a trade or business of the
taxpayer, as determined based on the dominant motivation of the
taxpayer in incurring the debt. United States v. Generes, 405
U.S. 93, 104 (1972). In determining the dominant motivation of a
taxpayer who is both employee and shareholder, objective factors
to be considered are the size of the taxpayer’s investment in the
corporation; the size of the salary received from the
corporation; other sources of gross income available to the
taxpayer; the ability of the corporation to remain in business
absent the taxpayer’s guaranty; and the degree to which the
taxpayer’s employment is protected by his or her equity position
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