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Nevertheless, we should point out that our holding in this
respect should not be read to suggest that petitioner’s failure
to report a trade or business on Schedule C for the prior years
is irrelevant. In that regard, a taxpayer’s listing of his
occupation as an “executive” on his tax returns and his failure
to file a Schedule C in connection with a purported trade or
business are factors that indicate that the taxpayer is not in
the trade or business of lending money. Estate of Bounds v.
Commissioner, T.C. Memo. 1983-526. Thus, although petitioner’s
failure to report a trade or business on Schedule C in the prior
years is not conclusive, we weigh this factor with other factors
in determining whether petitioner was in the trade or business of
making loans and guaranties.20 After considering the loans and
guaranties for the prior years and for the years at issue, we
cannot conclude that petitioner was engaged in any such trade or
business.
20Respondent also alleges that petitioner’s activities prior
to 1990 are irrelevant in that they “have no apparent factual
nexus with his activities in the years at issue and are not
probative” whether he was engaged in a trade or business in 1990.
We cannot agree. Each of the activities in this case involved
loans and guaranties made to, or made with respect to, a company
in which petitioner held an interest. Moreover, we cannot agree
that a “factual nexus” is required amongst the individual
transactions that together establish a trade or business.
Indeed, as petitioner points out: “The more extensive the loans,
more numerous borrowers and longer time interval when loans are
made, the stronger the argument for a trade or business.”
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