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2Petitioner also claims to have paid six items of WMG expense, totaling
$19,050.49, in 1992.
3The total of the loans listed above is actually $4,984,850.
Respondent contends that petitioner’s return treatment for the
lending and financing activity in 1990-95 is inconsistent with
his return treatment for that activity during prior tax years;
therefore, evidence of the prior tax years is “irrelevant”, and
we should only consider those loans and guaranties which occurred
in 1990-95.19 We disagree.
Petitioner’s loans and guaranties during prior tax years are
relevant in determining whether he was in the trade or business
of making loans and guaranties. We do not agree with respondent
that petitioner’s failure to list lending or financing as his
trade or business on returns for tax years prior to 1990, or his
failure to report guaranty fees on a Schedule C, forecloses
petitioner’s reliance on loans and guaranties that he made during
those prior years. Indeed:
Reporting an activity on Schedule C is indicative
of a trade or business. However, petitioner’s failure
to so report his income from lending activities on
Schedule C is not conclusive of the absence of a trade
or business. This is particularly true when as here
the return was prepared by a CPA. [Ruppel v.
Commissioner, T.C. Memo. 1987-248.]
19Respondent argues that petitioner’s failure to report the
IBC guaranty fees received in 1987, 1988, and 1989, as Schedule C
income from a lending and financing trade or business, was
“factually inconsistent with the mandate of I.R.C. � 6011(a).”
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