- 35 -
written authorization simply memorialized what the board had
previously agreed to as part of informal discussions. Petitioner
testified that “I certainly felt entitled to rely on that. These
are honorable men on that board of directors. I had no
concerns.”
The minutes and resolutions, which relate to the various
guaranty fees from IBC, show that there was much more going on
than the informal discussions that petitioner alludes. Although
it is clear that petitioner expected some fee from IBC at the
time of making the guaranties, it is not clear that he was aware
of the amount, if any, that he would receive. Only upon formal
authorization by the board do we find any assurance of a guaranty
fee being paid to petitioner. Certainly, the lack of formalism
in petitioner’s making the guaranties and obtaining assurance
other than reliance on the “honorable men” of the board is a
factor inconsistent with the existence of a trade or business.
Petitioner also relies upon the guaranties made during the
1960s and 1970s with respect to loans involving Medicor.
However, the record does not show that petitioner received any
fees with respect to those guaranties, and guaranties alone
without the related fees would be insufficient to support a
finding of a trade or business. Petitioner claims to have
received a 1-percent fee on the endorsement of the note for the
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011