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999 (10th Cir. 1993). The question whether a debt is a business
or nonbusiness debt is one of fact, and it depends upon whether
the debt is proximately related to a trade or business of the
taxpayer. Imel v. Commissioner, 61 T.C. 318, 323 (1973); sec.
1.166-5(b)(2), Income Tax Regs.
Respondent determined that petitioner was not engaged in the
trade or business of lending or financing as he claimed on his
Federal income tax returns for 1990-95. Petitioner contends, on
the other hand, that he has a long history of making loans and
guaranties that together shows that he was involved in the trade
or business of making loans and guaranties.
To be engaged in a trade or business, the taxpayer must be
involved in the activity with continuity and regularity, and the
taxpayer’s primary purpose for engaging in the activity must be
for income or profit. Commissioner v. Groetzinger, 480 U.S. 23,
35 (1987); see also Golanty v. Commissioner, 72 T.C. 411, 425-426
(1979), affd. without published opinion 647 F.2d 170 (9th Cir.
1981). Section 166(a) is applicable only to the exceptional
situations in which the taxpayer’s activities in making loans
have been regarded as so extensive and continuous as to elevate
that activity to the status of a separate business. Imel v.
Commissioner, supra at 323. In determining whether the taxpayer
is in the trade or business of lending money, we consider: (1)
The total number of loans made; (2) the time period over which
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