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promissory note, there was no fixed schedule for repayment, and
there were no interest payments made. As the Court stated in
Calumet Indus., Inc. v. Commissioner, supra at 287, “We find that
as an economic reality the advances in the instant case were
placed at the risk of the business of the company and that it is
unlikely that disinterested investors would have made loans * * *
on terms similar to those on which the advances were made.”
Furthermore, petitioners offered no evidence that the money
advanced by Mrs. Hess is otherwise deductible. Accordingly, we
sustain respondent’s determination that the advance made by Mrs.
Hess to Hess Inc. was a capital contribution and that petitioners
are not entitled to the NOL carryover deductions in the taxable
years at issue.
Respondent conceded at trial that the $234,457 transferred
to Hess Inc. was a contribution to capital and that petitioners
are entitled to a capital loss. Sec. 165(g). For open years,
this capital loss is deductible only to the extent of capital
gains plus, for married taxpayers like petitioners, the lower of
ordinary income up to $3,000 or the excess of such losses over
such gains. Sec. 1211.
We now decide whether petitioner is liable for the additions
to tax pursuant to section 6651(a)(1). Section 6651(a)(1)
imposes an addition to tax for failure to file a Federal income
tax return by its due date, unless the taxpayer establishes that
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