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the loans were made; (3) the adequacy and nature of the
taxpayer’s records; (4) whether the loan activities were kept
separate and apart from the taxpayer’s other activities; (5)
whether the taxpayer sought out the lending business; and (6) the
amount of time and effort expended in the lending activity and
the relationship between the taxpayer and his debtors. United
States v. Henderson, 375 F.2d 36, 41 (5th Cir. 1967); Serot v.
Commissioner, T.C. Memo. 1994-532, affd. without published
opinion 74 F.3d 1227 (3d Cir. 1995).
Petitioner argues that he was in the trade or business of
“making loans and guaranties”; he relies on the following summary
of guaranties and loans that petitioner claims he made:
Guaranties petitioner made
Year Debtor Amount of guaranties Guaranty fee
1984 IBC $9,000,000 $90,000
1987 IBC 15,000,000 150,000
1988 IBC 17,500,000 175,000
1989 IBC Amusement
Rides, Inc. 1,500,000 150,000
1990 IBC 8,500,000 85,000
Total 51,500,000 650,000
Loans petitioner made
Year Debtor Amount of loans Number of loans
1979-86 IBC $397,738 125
1989 WMG 3,000,000 1
1989 WMG 1696,456 23
1990 WMG 643,646 61
1991 WMG 236,450 25
1992 WMG 210,560 5
Total 34,989,850 240
1Respondent points out that this amount includes $90,843.21, which petitioner
paid to Natwest in 1989, in respect of his personal obligation to Natwest.
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