Helpful Hints
  • (1) You can search the entire content of Dean’s by phrase or by individual words. Just type your keywords into the search box and then pull down the search icon on the right and choose the option you need: search by word or by phrase or reset the content.
  • (2) Double click on a word in the content of a definition, and if the word is listed as a keyword in Dean’s, it will look that word up.
  • (3) You can use the search function to help jump the scrolling function. Simply type the first 2-3 letters into the search box then hit enter on your keyboard and the scroll will go to those Keywords that begin with those letters and allow you to scroll from there.

The character of a bad debt loss is determined by the relationship it bears to the taxpayer's trade or business. A debt will only qualify as a business bad debt if it bears a direct relationship to the taxpayer's trade or business (Hogue v. Commissioner, 459 F.2d 932, 939, fn. 11 (C.A. 10, 1972), affirming a Memorandum Opinion of this Court; Estate of Martha M. Byers, 57 T.C. 568, 577 (1972); Oddee Smith, 55 T.C. 260, 268 (1970), vacated and remanded per curiam 457 F.2d 797 (C.A. 5, 1972), opinion on remand 60 T.C. 316 (1973)), and such relationship is a proximate one. I. Hal Millsap, Jr., 46 T.C. 751, 754, fn. 3 (1966), affd. 387 F.2d 420 (C.A. 8, 1968); Stratmore v. United States, 420 F.2d 461 (C.A. 3, 1970); sec. 1.166-5(b), Income Tax Regs.

It is clear that being an employee may constitute a trade or business for the purposes of section 166. Trent v. Commissioner, 291 F.2d 669 (C.A. 2, 1961); cf. David J. Primuth, 54 T.C. 374 (1970). Being an investor in a corporation does not constitute a trade or business, and losses resulting from guarantees made to protect a ...

Register or login to access full content