Tax Research

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WEI-CHIH CHIANG, DBA, CPA, Associ- ate Professor of Accounting, School of Business Administration, University of Houston—Victoria, Katy, Texas.

ANKIT SOLANKI, MBA, Senior at Bentley, Bratcher & Associates, PC, Houston, Texas.

JUNE 2017

Plan Ahead Before It Goes Bad By Wei-Chih Chiang and Ankit Solanki

Wei-Chih Chiang and Ankit Solanki examine the requirements to claim the business bad debt deduction and review several court cases providing judicial guidance of these requirements.

M onetary contributions to a company may be classifed as either equity or debt fnancing. Due to tax benefts, taxpayers generally prefer to treat their contributions as loans to the company. When loans are not col- lectable, taxpayers may qualify to deduct business bad debt expenses under Code Sec. 166. However, some requirements (e.g., the bona fde debt test, the business test, and the worthlessness test) should be met before taxpayers can obtain the business bad debt deduction. Tis article reviews several court cases to provide judicial guidance of these requirements.

Background Code Sec. 166(a) allows a deduction for debts which become fully worthless within the tax year. If a debt is partially worthless, the portion charged of may be deductible. Nevertheless, the following factors should be considered before the deductibility could be determined. See Exhibit 1 for the fowchart of the bad debt deduction determination.

First, the debt must be bona fde. A bona fde debt is a debt arising from a debtor- creditor relationship with a valid and enforceable obligation of paying a fxed or determinable sum of money.1 Tis defnition specifcally excludes contributions to capital as a bona fde debt. However, the line between debt and equity could be vague and controversial. Whether a contribution is a bona fde debt or equity is a question of fact and the debt-or-equity classifcation should be based on all of the facts and circumstances in the particular case.2

© 2017 W.C. CHIANG AND A. SOLANKI

JUNE 2017

PLAN AHEAD BEFORE IT GOES BAD

EXHIBIT 1. FLOWCHART FOR DETERMINING BAD DEBT DEDUCTIONS

No Bona Fide Debt?

Yes

No Worthless?

Yes

Totally or Partially Worthless?

Partially Worthless Totally Worthless

No No Business Related? Business Related?

Yes Yes

Corporate or Individual Taxpayer?

Corporate Taxpayer Individual Taxpayer

Trade/Business or Employment Related?

Trade/Business Employment Related

No Bad Debt Short-Term Capital Deduction

Deduction against Ordinary Income

Itemized Business Expense Deduction subject to the 2% Loss

foor

In addition, losses of guarantors, endorsers, and indem- nitors on obliged agreements may be treated as worthless business debt if an agreement is entered in the course of a trade or business or as worthless nonbusiness debt if an agreement is entered for proft but not in the course of a trade or business.3 In addition, the taxpayer must have a legally enforceable duty to make such guaranteed payment, the taxpayer must have entered into the agreement before

Taxes The Tax Magazine®

the guaranteed obligation became worthless, and the tax- payer must demonstrate that reasonable consideration was received for entering into the agreement.4

Second, the deductibility depends on whether the debt is business-related or not. Code Sec. 166(d) distinguishes business debts from nonbusiness debts. In general, a busi- ness debt is a debt occurred or acquired in connection with a trade or business. A corporate taxpayer is allowed to

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deduct a business bad debt from its busi- ness income but an individual taxpayer shall consider his or her nonbusiness bad debt as a short-term capital loss. Ad- ditionally, when the debt is related to an individual taxpayer’s trade or business, it would be allowed a deduction against ordinary income. However, if the debt is related to individual taxpayer’s employ- ment, it may be itemized as an employee business expense but is subject to the two-percent foor.

Tird, the debt shall be fully or par- tially worthless. A business bad debt is deductible when it is fully or partially worthless. However, a nonbusiness bad debt is deductible only if the debt is fully worthless.5 Tat is, when a nonbusiness debt is partially worthless, no deduction is allowed. Also, a taxpayer acting as a guarantor, endorser, or indemnitor with a right of subrogation or other similar right is not entitled to a bad debt de- duction until the subrogation or other similar right is worthless.6

Judicial Opinions Although the above rules seem to be very simple, there are gray areas in applying them in a real world case. Nevertheless, judicial opinions may provide some guidance on these issues and, thus, this article reviews several court cases ruled in the past few decades to reveal such guidance. See Exhibit 2 for a summary of these cases.

Exhibit 2 shows that 15 cases were ruled as equity while 7 cases were deter- mined as debt. Also, it is noticeable that there was no debtor–creditor relation- ship existing in 12 cases. Apparently, when the debtor–creditor relationship is not present, no bad debt deduction will be allowed. Te common scenarios where debtor–creditor relationship does not exist are as follows. 1. Taxpayers have not substantiated

that a debt exists.7 Taxpayers’ self- generated, nonitemized receipts or

expense records are insufficient to

JUNE 2017

EXHIBIT 2. SUMMARY OF JUDICIAL OPINIONS ON THREE REQUIREMENTS

Case Name Debt/Equity Business/

Nonbusiness Worthless

Hubert Enterprises, Inc., 125 T.C. 72 Equity N/A N/A American Offshore, Inc. (2), 97 T.C. 579 Equity N/A N/A Calumet Industries, Inc., 95 T.C. 257 Equity N/A N/A Recklitis, 91 T.C. 874 Equity N/A N/A Dixie Dairies Corporation, 74 T.C. 476 Equity N/A N/A Herrera, T.C. Memo 2012-308 Equity N/A N/A Chapman, T.C. Memo 2014-82 Equity N/A N/A Hultquist, T.C. Memo 2011-17 Equity N/A N/A Ramig, T.C. Memo 2011-147 Equity N/A N/A PK Ventures, Inc., T.C. Memo 2006-36 Equity N/A N/A

Rosenberg, T.C. Memo 2000-108 Equity N/A N/A

Shaw, T.C. Memo 2013-170 Equity N/A Not Worthless

Bynum, T.C. Memo 2008-14 Equity N/A Not Worthless

Alpert, T.C. Memo 2014-70 Equity Nonbusiness Not Worthless

Lease, T.C. Memo 1993-493 Equity Nonbusiness Worthless

Boneparte, T.C. Memo 2015-128 No Debt N/A N/A Patel, T.C. Memo 2012-9 No Debt N/A N/A Gorokhovsky, T.C. Memo 2012-206 No Debt N/A N/A Natkunanathan, T.C. Memo 2010-15 No Debt N/A N/A Stewart, T.C. Memo 2010-184 No Debt N/A N/A Pace, T.C. Memo 2010-272 No Debt N/A N/A Foxworthy, Inc., T.C. Memo 2009-203 No Debt N/A N/A Ferguson, T.C. Memo 2006-32 No Debt N/A N/A Prowse, T.C. Memo 2006-120 No Debt N/A N/A Schnell, T.C. Memo 2006-147 No Debt N/A N/A Deutsch, T.C. Memo 2012-318 No Debt N/A Not Worthless Egan, T.C. Memo 2005-234 No Debt N/A Not Worthless Intergraph Corporation, 106 T.C. 312 N/A N/A Not Worthless American Offshore, Inc. (1), 97 T.C. 579 N/A N/A Worthless Crown, 72 T.C. 582 N/A N/A Worthless Vianello, T.C. Memo 2010-17 N/A N/A Not Worthless Lee, T.C. Memo 2006-70 N/A N/A Worthless Espaillat, T.C. Memo 2015-202 N/A Nonbusiness Not Worthless Langert, T.C. Memo 2014-210 N/A Nonbusiness Not Worthless Kenna Trading, LLC, 143 TC 322 N/A Nonbusiness Not Worthless Dagres, 136 T.C. 263 N/A Business Worthless Bishop, T.C. Memo 2013-98 Debt N/A Not Worthless Racal Electronics Inc., T.C. Memo 1990-494 Debt N/A Worthless Nachman, T.C. Memo 1996-288 Debt N/A Worthless Ward, T.C. Memo 1984-424 Debt Nonbusiness Worthless Helwing, T.C. Memo 1999-386 Debt Business Not Worthless HIE Holdings, Inc., T.C. Memo 2009-130 Debt Business Worthless Baldwin, T.C. Memo 1993-433 Debt Business Worthless

 Two monetary transfers were examined in the American Offshore, Inc. case. The frst one was related to a subordinate note and the second one was related to the transfers of funds.

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substantiate expenses.8 Also, if promissory notes used as evidence were not dated and were signed only by the alleged debtor with no witness or any notary seal, the debtor–creditor relationship does not exist.9 Taxpayers must present credible fnancial documents (e.g., canceled checks, bank statements, foreclosure documents, any probative documentary evidence sup- porting the alleged adjusted bases in the loans, etc.) to demonstrate the debtor–creditor relationship.10

Due to tax benefits, taxpayers generally prefer to treat their contributions as loans to the company. When loans are not collectable, taxpayers may qualify to deduct business bad debt expenses under Code Sec. 166. 2. Uncollected receivables usually are not considered as

“bad debt” for bad debt deduction purposes.11 Tat is, worthless debts arising from unpaid trade receivables could not be deducted as bad debts unless the tax- payer has included the income amounts for the year or before.12 Likewise, unpaid wages, fees, and similar items of taxable income are deductible as bad debts only if they were previously reported as income.13

3. No bona fde debt exists if a guarantor does not show that (a) an agreement to act as a guarantor in exchange for reasonable consideration was entered, (b) such an agreement was entered in the course of their trade or business or a transaction for proft, (c) the guarantor had an enforceable legal duty to make the payment, and (d) the guarantor entered into such an agreement before the obligation became worthless.14

4. A transfer between family members is presumed to be a gift for tax purposes.15 To rebut this presumption, taxpayers should provide supporting evidence such as loan documents or demands for repayment, indicat- ing a real expectation of repayment and the intent to enforce collection.16

Debt vs. Equity In order to verify a bona fde debt, it is inevitable to ponder the long-lasting debt-or-equity classifcation dilemma. Under Code Sec. 385, the IRS has the authority to issue regulations to determine whether a contribution to capital should be treated as debt or equity. Code Sec. 385 further

states that such regulations may consider the following fve factors in the classifcation guidelines: 1. Written unconditional promise to pay on demand or

on a specifed date a certain sum of money and to pay a fxed interest rate.

2. Subordination or superiority to other creditors. 3. Debt to equity ratio. 4. Convertibility into stock. 5. Te proportionality of the holdings between the

existing shareholders and the providers of the interest at issue.

In the past, the judicial system has developed factor analysis to resolve the debt-or-equity issue.17 Tat is, the court will consider a set of signifcant factors in deciding the case. Likewise, the IRS incorporates 12 of these commonly adopted judicial factors in FSA 200205031,18 including (1) the name and presence of a written agreement demonstrating indebtedness, (2) the presence of a fxed maturity date, (3) the source of repayments, (4) the right to enforce payment, (5) increased participation in management as the result of the advance, (6) subordination, (7) thinness of the capital structure in relation to debt, (8) the identity of interest between creditor and stockholder, (9) the source of interest payments, (10) the ability of the corporation to obtain credit from outside sources, (11) the use of funds for capital assets or risk involved in making the advances, and (12) the failure of the debtor to repay. Moreover, the classifcation should be determined on a balanced consideration of all these factors instead of any single factor.19

As shown in Exhibit 2, the Tax Court decided the debt- or-equity classifcation issue in 22 cases where only 7 cases were ruled as debt. Tat is, approximately two-thirds of the bad expense deduction claims were declined because the courts could not fnd that a bona fde debt relationship existed. Further, we analyze the 12 factors listed in FSA 200205031 on 6 cases where the factor analysis was ap- plied to resolve the debt-or-equity classifcation dilemma. Exhibit 3 shows the judicial opinions on each factor in these cases.20 In addition to these factors, the courts may look into other factors such as the parties’ intent and the economic realities at the time when the advances were made.21 In practice, “source of repayment” and “right to enforce” are considered as the two most infuential factors in resolving the debt-or-equity issue.22

Business vs. Nonbusiness Since business bad debts provide better tax treatments, most taxpayers prefer to claim their bad debts as business

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EXHIBIT 3. JUDICIAL OPINIONS ON THE DEBT/EQUITY FACTORS Fixed Maturity Source of Right to Identity of Source of Outside Use of Failed to

Case Name Date Repay Enforce Management Subordination Capitalization Interest Interest Loan Funds Repay

Bishop, T.C. Memo 2013—98 Debt Debt Debt Debt Debt Debt — Debt — Equity — Equity

Helwing, T.C. Memo 1999—386 – Debt Debt — — — Debt — Debt — — —

Nachman, T.C. Memo 1996—288 Debt Debt Debt Debt Debt Equity Debt Neutral Debt Neutral Debt Equity

Baldwin, T.C. Memo 1993—433 Debt Debt Debt Debt — Equity Debt Equity Debt Equity — Equity

Racal Electronics Inc., T.C. Memo Debt Debt Equity Debt Debt Equity Debt Debt Debt Neutral Debt Equity 1990—494

Ward, T.C. Memo 1984—424 — Debt Debt — Debt Debt — — Debt — — —

Notes: Debt: Judicial opinion regarding the factor in favor of debt. Equity: Judicial opinion regarding the factor in favor of equity. Neutral: Judicial opinion was neutral or gave no/little weight to the factor. — : No judicial opinion was given to the factor.

bad debts. However, in order to qualify as a business bad debt, the debt must have been created or acquired in connection with a trade or business of the taxpayer, or the loss must have been incurred in the taxpayer’s trade or business. Also, if a “proximate relationship” in the conduct of the trade or business existed when the taxpayer was engaged and the debt became worthless; the debt is considered as a business debt. Te Supreme Court in E. Generes23 set the test for determining whether a particular debt has a proximate relationship to the taxpayer’s trade or business. Tat is, the taxpayer should show dominant motivation, and signifcant motivation is not sufcient. Te determination of the taxpayer’s dominant motivation is a question of fact.24

Likewise, whether a debt is a nonbusiness debt is a question of fact in each particular case.25 Judicial prec- edents may provide some guidance on this issue. Te Tax Court considers debts in the following scenarios as business-related. 1. If the taxpayer’s dominant motive is to increase his

or her salary or compensation, the debt is a business debt related to his or her employment.26 For example, when the potential for success of the company’s busi- ness depends on taxpayer’s salesmanship rather than capital investment in the company and the taxpayer expects the company to compensate him for his eforts through salary and bonuses, the court may hold that taxpayer’s dominant motive in making the loan to the company is to secure his salary and bonuses, and his continuing employment with the company.27

2. If a company’s business activities include lending funds, purchasing inventory, providing float for

customers, and building manufacturing facilities to address customers’ needs, there could be business potential and reasonable expectation of proft for the company. If that potential is corroborated by unre- lated third parties, the court may rule that the loans are made for the purpose of developing business op- portunities and, thus, are proximately related to the company’s trade or business.28

3. When a state court judgment establishes that a debtor–creditor relationship exists and the debt is a bona fde business debt, the Tax Court may follow the state court judgment.29

In order to verify a bona fide debt, it is inevitable to ponder the long-lasting debt-or- equity classification dilemma.

Debts in the following scenarios could be considered by the Tax Court as nonbusiness-related. 1. If a taxpayer enters into an indemnifcation agreement

not in the course of proft-making but to protect himself/herself from personal liability, any loss in connection with the agreement is nonbusiness.30

2. When making a loan to the company, the taxpayer is not receiving any salary as an employee.31 Although a taxpayer need not receive a salary in order for advances to be related to his trade or business,32 a loan motivated by an employee status seems more

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plausible if its objective is to protect a present salary rather than to promote a future one.33 Moreover, if the taxpayer’s dominant motive of making loans is to protect his or her investment in a corporation where he or she is also employed, the loss on the loans is a nonbusiness bad debt.34

Familiarity with these practices should help taxpayers and their tax advisers plan ahead on financing transfers.

3. Taxpayers do not argue and the court records do not support that they are in a trade or business.35

4. To be in the trade or business of lending money, the taxpayer’s activity of making loans should be extensive and continuous to the level of a separate business.36 Te Tax Court has ruled that the making of eight or

EXHIBIT 4. WORTHLESSNESS FACTORS

Te courts have considered the following factors in determining worthlessness.

1. Te subordinated status of the debt, 2. Decline in the debtor’s business, 3. Decline in value of the property secured by

the debt, 4. Claims of prior creditors far in excess of

the fair market value of all assets available for payment,

5. Te overall business climate, 6. Te debtor’s earning capacity, 7. Te debtor’s serious fnancial reverses, 8. Guarantees on the debt, 9. Events of default, 10. Insolvency of the debtor, 11. Te obligor’s refusal to pay, 12. Abandonment of assets or business, 13. Ill health, death, or disappearance of the

principals, 14. Bankruptcy or receivership, 15. Actions of the obligee in pursuing collection, 16. Subsequent dealings between the obligee and

obligor, and 17. Lack of assets.

nine loans in the course of a 4-year period37 or six loans over the approximately 30 years38 did not elevate the activity to the status of a separate business.

5. If partnerships merely operate as conduits for losses imported into the U.S. tax system, these partnerships do not operate as trades or businesses. Accordingly, taxpayers as partners fail to show that the losses are related to a trade or business.39

6. If the loans are made in order to obtain a retire- ment trade or business, the taxpayer looks forward to entering a new business upon retiring from his or her current trade or business. When making the loans, the taxpayer is not currently engaged in a trade or business to which the loans are approxi- mately related. As a result, the loans are considered as nonbusiness.40

Worthlessness To claim a bad debt deduction, taxpayers are not required to take legal action if a debt is worthless and uncollect- ible such that any legal action to enforce payment would probably be in vain.41 When or whether a debt becomes worthless is a question of fact,42 and the answer is deter- mined by objective standards.43 Te courts have considered several factors in determining worthlessness.44 See Exhibit 4 for a summary of these factors.

Generally, a taxpayer must show identifiable events to prove the worthlessness of the debt in the year claimed.45 In our review, the Tax Court has ruled debts under the following scenarios as not worthless in the year at issue. 1. Taxpayers claimed bad debt deductions but provided

no evidence that the debts became worthless in the years at issue.46 Evidence should be documents or something other than the taxpayer’s own testimony.47

2. Te taxpayer alleged that the debtor’s fnancial records showed the worthlessness of the debt. However, except for subjective opinions, the taxpayer provided no fnancial records to the court.48

3. While disbursing hundreds of thousands of dollars, the debtor still had substantial assets and did not become insolvent.49

4. If the debt became worthless in prior years and had no value at the beginning of the year at issue, the worthlessness requirement was not met.50

5. If the debtor’s spouse was not liable to the debt, the debtor spouse’s bankruptcy discharge was irrelevant to the worthlessness of the debt.51

6. Although debtor’s liabilities may have exceeded its assets, it continued to operate as a going concern.

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Also, the taxpayer continued to extend its guarantee in support of the debtor’s overdraft privilege.52

7. While transferring some assets away, the debtor still had substantial rental income.53

8. Although the debtor fled a bankruptcy petition, it continued to be an operating business for years.54 Likewise, while making a bankruptcy filing, the debtor still possessed potentially valuable assets.55

9. For a partial worthlessness claim, the taxpayer pro- vided no statistical study or other analysis of which debts or types of debts were worthless.56

10. Te debtor’s continued extension of credit was not consistent with the claim of worthlessness.57

11. Te loan became delinquent in a prior year and the taxpayer began to lose hope that the debt would eventually be repaid. However, taxpayer’s continued collection eforts afterward could indicate that the loan did not become worthless in these years.58

On the other hand, the Tax Court ruled debts under the following scenarios as worthless in the year at issue. 1. Te taxpayer and the IRS agreed that the taxpayer’s

interest became worthless.59 2. Te collapse of the ofshore oil rig supply industry

leading to the loss in value of the vessels was a suf- ciently identifable event to explain the worthlessness of the debt.60

3. After a bankruptcy fling, the parties involved prop- erly acknowledged that further eforts to recover the indebtedness would be futile.61

4. If a mutual agreement of settlement released a debt

ENDNOTES

for satisfactory consideration, a bad debt deduction was not allowed.62 However, the cancellation of in- debtedness which reassured the debtor’s obligation may establish the worthlessness of the debt.63

5. When a state court judgment establishes that the debt was worthless, the Tax Court may follow the state court judgment.64

6. Te debtor paid no salary and was unable to make full payments of its employment tax liabilities and operat- ing expenses. All of its properties were encumbered by security interests and tax authority liens. Taxpayer’s counsel and accountant recommended that the cor- poration fle for bankruptcy protection and advised the taxpayer that it was unlikely to collect on the debt. Tese scenarios indicated that the debt was worthless.65

Conclusion Although Code Sec. 166(a) allows a deduction for debts which become worthless during the tax year, several requirements must be met in order to take the deduction. Specifically, the bona fide debt test, the business test, and the worthlessness test should be examined. Nevertheless, these tests are somewhat ambiguous and, thus, judicial guidance on how the courts apply these tests is needed. This article reviews several Tax Court cases and reveals the judicial practices on these tests. Familiarity with these practices should help taxpayers and their tax advisers plan ahead on financing transfers.

1 Reg. §1.166-1(c). 58,412(M), TC Memo. 2010-272; H. Prowse, 91 TCM 23 E. Generes, SCt, 72-1 ustc ¶9259, 405 US 93, 92 2 A.R. Lantz Co., CA-9, 424 F2d 1330, 70-1 ustc 1253, Dec. 56,538(M), TC Memo. 2006-120; and SCt 827.

¶9308, 25 AFTR2d 70-917. M. Schnell, 92 TCM 25, Dec. 56,566(M), TC Memo. 24 Putoma Corp., 66 TC 652, Dec. 33,911 (1976), aff’d 3 Reg. §1.166-9(a), (b), and (e)(1). 2006-147. CA-5, 79-2 ustc ¶9557, 601 F2d 734, 44 AFTR2d 4 Reg. §1.166-9(d). 14 S.M. Ferguson, 91 TCM 785, Dec. 56,438(M), TC 79-5576. 5 Reg. §1.166-5(a)(2). Memo. 2006-32. 25 S.M. Byck, CA-5, 64-1 ustc ¶9137, 325 F2d 551. 6 Reg. §1.166-9(e)(2). 15 C. Perry, 92 TC 470, Dec. 45,533. 26 I.J. Smith, 68 TCM 1538, Dec. 50,318(M), TC Memo. 7 See, for example, M. Stewart, 100 TCM 149, Dec. 16 J. Boneparte, 110 TCM 39, Dec. 60,346(M), TC 1994-640.

58,307(M), TC Memo. 2010-184 and W.A. Egan, 90 Memo. 2015-128. 27 J.C. Baldwin, 66 TCM 769, Dec. 49,289(M), TC TCM 365, Dec. 56,162(M), TC Memo. 2005-234. 17 See, for example, T. Mixon Est., CA-5, 72-2 ustc Memo. 1993-433.

8 D.T. Robinson, 101 TCM 1473, Dec. 58,619(M), TC ¶9537, 464 F2d 394. 28 E.A. Helwig, 78 TCM 838, Dec. 53,635(M), TC Memo. 2011-99. 18 FSA 200205031 (Nov. 1, 2001). Memo. 1999-386.

9 Foxworthy, Inc., 98 TCM 177, Dec. 57,928(M), TC 19 J. Kelly Co., SCt, 46-1 ustc ¶9133, 326 US 521, 66 29 HIE Holdings, Inc., 97 TCM 1672, Dec. 57,847(M), Memo. 2009-203. SCt 299. TC Memo. 2009-130.

10 F. Deutsch, 104 TCM 573, Dec. 59,257(M), TC 20 For detailed judicial guidance on the debt-or- 30 R. Alpert, 107 TCM 1366, Dec. 59,883(M), TC Memo. 2012-318. equity classifcation, see W.-C. Chiang and K.H. Memo. 2014-70.

11 For example, see G.C. Patel, 103 TCM 1066, Lee, Judicial Guidance to Secure Debt Status, 31 R.W. Lease, 66 TCM 1121, Dec. 49,357(M), TC Dec. 58,910(M), TC Memo. 2012-9 and V.M. Taxes Nov. 2010, at 43–48. Memo. 1993-493. Gorokhovsk, 104 TCM 87, Dec. 59,130(M), TC 21 Racal Electronics Inc., 60 TCM 756, Dec. 32 C.J. Burwell, 56 TCM 490, Dec. 45,128(M), TC Memo. 2012-206. 46,874(M), TC Memo. 1990-494. Memo. 1988-495.

12 R.L. Gertz, 64 TC 598, Dec. 33,335. 22 For details, see W.-C. Chiang and T.D. Englebrecht, 33 Putoma Corp., supra note 24. 13 S. Natkunanathan, 99 TCM 1071, Dec. 58,118(M), Distinguishing Debt from Equity: A Practical As- 34 T.A, Dagres, 136 TC 263, Dec. 58,581.

TC Memo. 2010-15; D.F. Pace, 100 TCM 529, Dec. sist, The CPA Journal, Jan. 2013, 83(1): 52–55. 35 J. Espaillat, 110 TCM 387, Dec. 60,428(M), TC

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Memo. 2015-202. 45 Id. 55 H. Crown, 77 TC 582, Dec. 38,251. 36 R.E. Imel, 61 TC 318, Dec. 32,239. 46 D. Bynum, 95 TCM 1060, Dec. 57,315(M), TC Memo. 56 Kenna Trading, LLC, supra note 39. 37 Id. 2008-14. 57 Helwig, supra note 28. 38 S.M. Langert, 108 TCM 430, Dec. 60,050(M), TC 47 Deutsch, supra note 10. 58 M.D. Lee, 91 TCM 999, Dec. 56,476(M), TC Memo.

Memo. 2014-210. 48 J. Shaw, 106 TCM 54, Dec. 59,589(M), TC Memo. 2006-70. 39 Kenna Trading, LLC, 143 TC 322, Dec. 60,059. 2013-170 and M.A. Bishop, 105 TCM 1597, Dec. 59 Ward, supra note 40; Lease, supra note 31; 40 R.A. Ward, 48 TCM 815, Dec. 41,411(M), TC Memo. 59,505(M), TC Memo. 2013-98. Nachman, TC Memo. 1996-288.

1984-424. 49 Alpert, supra note 30. 60 American Offshore, Inc., supra note 44. 41 Reg. §1.166-2(b). 50 Egan, supra note 7. 61 Crown, supra note 55. 42 L. Boehm, SCt, 45-2 ustc ¶9448, 326 US 287, 66 51 Id. 62 M.L. Harrison, 59 TC 578, Dec. 31,824 (1973).

SCt 120. 52 Intergraph Corporation, 106 TC 312, Dec. 51,337. 63 Racal Electronics Inc., supra note 21. 43 E.V. Perry, 22 TC 968, Dec. 20,473 (1954). 53 M. Vianello, 99 TCM 1080, Dec. 58,120(M), TC 64 HIE Holdings, Inc., supra note 29. 44 American Offshore, Inc., 97 TC 579, Dec. 47,750 Memo. 2010-17. 65 Baldwin, supra note 27.

(1991). 54 Espaillat, supra note 35.

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