United States v. Generes (1972)

Co., 386 U. S. 317, 326-330 (1967); United States v. Generes, 405 U.S. 93, 106-107 (1972). *491 Respondents’ complaint also prayed for equitable relief, and the Court of Appeals held that if respondents established a § 7 violation, they might be entitled to an injunction against “those practices by which a deep pocket market entrant harms competition.” 523 F. 2d, at 279 .

The circumstances relied on by the Tax Court can be framed in terms of the “risk v. potential reward” analysis put forth by the Supreme Court in Generes, 405 U.S. at 104, 106 , 92 S.Ct. at 833, 834 .

The Tax Court was not required to believe Richard. 20 The circumstances relied on by the Tax Court can be framed in terms of the "risk v. potential reward" analysis put forth by the Supreme Court in Generes, 405 U.S. at 104, 106 , 92 S.Ct. at 833, 834 .

The Supreme Court explained that “[i]n determining whether a bad debt is a business or a nonbusiness obligation, the Regulations focus on the relation the loss bears to the taxpayer’s business,” and that “[i]f, at the time of worthlessness, that relation is a proximate one, the debt qualifies as a business bad debt and the aforementioned desirable tax consequences then ensue.” Id. at 95 (internal quotation marks omitted).

See Generes, 405 U.S. at 100 , 92 S.Ct. at 831 (“status as a shareholder was a nonbusiness interest”).

See 26 U.S.C. § 1212 (b); see also United States v. Generes, 405 U.S. 93, 96 (1972) (“[I]f the obligation is a non- business debt, it is to be treated as a short-term capital loss subject to the restrictions imposed on such losses by [§] 166(d)(1)(B) and [§§] 1211 and 1212, and its use for car- ryback purposes is restricted by § 172(d)(4).”).

See 26 U.S.C. § 1212 (b); see also United States v. Generes, 405 U.S. 93, 96 (1972) (“[I]f the obligation is a non- business debt, it is to be treated as a short-term capital loss subject to the restrictions imposed on such losses by [§] 166(d)(1)(B) and [§§] 1211 and 1212, and its use for car- ryback purposes is restricted by § 172(d)(4).”).

See 26 U.S.C. §§ 166 (a), (d); 172(b), (d)(4); 1211(b)(1); United States v. Generes, 405 U.S. 93, 95-96 (1972).

He apparently argues that United States v. Generes, 405 U.S. 93, 106 (1972) (finding that the witness' testimony, standing alone, did not "bear the light of analysis"), establishes a different standard of review for cases in which a witnesses' testimony conflicts with common sense.

See 26 U.S.C. §§ 166 (d)(2)(B), 702(a)(1) and 702(b) (whether a partnership's bad debt gives rise to a short-term capital loss is determined at partnership level and passed through to taxpayer); Whipple v. Commissioner, 373 U.S. 193, 201 (1963) ("business debt" must be proximately related to the taxpayer's trade or business); United States v. Generes, 405 U.S. 93, 103-05 (1972) (dominant motivation test used to determine if debt is proximately related to trade or business). …

The Osterbauer Court then went on to point out that “[i]n determining whether a bad debt had a ‘proximate’ relation to the taxpayer’s trade or business, the Supreme Court has stated that the proper measure is the dominant motivation of the taxpayer in making the loan.” Osterbauer, 1995 WL 594303 , p. 3 (citing United States v. Generes, 405 U.S. at 103, 92 S.Ct. at 833).

If, at the time of worthlessness, that relation is a ‘proximate’ one, the debt qualifies as a business bad debt and the aforementioned desirable tax consequences then ensue.” United States v. Generes, 405 U.S. 93, at 95-96 , 92 S.Ct. 827, at 829 , 31 L.Ed.2d 62 at 66 (decided February 23, 1972).

United States v. Generes, 405 U.S. 93, 103 (1972).

Section 166(a) generally allows a taxpayer a deduction for “any debt which becomes worthless within the taxable year.” To be entitled to a business bad debt deduction, taxpayers must prove (1) that a bona fide debt was created, (2) that the debt was created or acquired in proximate relation to a trade or business, and (3) that the debt became worthless in the year claimed. § 166(a)(1); United States v. Generes, 405 U.S. 93, 96 (1972); Calumet Indus., Inc. v. Commissioner, 95…

See I.R.C. §§ 1211, 1212; United States v. Generes, 405 U.S. 93, 96 (1972).

See I.R.C. §§ 1211, 1212; United States v. Generes, 405 U.S. 93, 96 (1972).

See I.R.C. §§ 1211, 1212; United States v. Generes, 405 U.S. 93, 96 (1972).

United States v. Generes, 405 U.S. 93, 96 (1972).

United States v. Generes, 405 U.S. 93, 100-103 (1973).

United States v. Generes, supra at 100, 106 ; Benak v. Commissioner, 77 T.C. 1213 , 1217-1218 (1981) , affd. 682 F.2d 207 (9th Cir. 1982) .

Rule 142(a) ; United States v. Generes, supra at 100, 106 ; Benak v. Commissioner, supra. 10 The Commissioner asserts that at the time he guaranteed the G.A.B. loan, Dr. Miller was not an employee of G.A.B. and received no salary from G.A.B. that his guaranty would safeguard.

United States v. Generes, supra at 104, 106 .

To distinguish a business from a nonbusiness debt, the Supreme Court in United States v. Generes, 405 U.S. 93, 103 (1972), held that the test is what the taxpayer’s dominant motivation was in undertaking the obligation.

The Supreme Court in United States v. Generes, 405 U.S. 93, 103 (1972), directed that the dominant motivation, not merely a significant motivation, must be business-related.

United States v. Generes, 405 U.S. 93, 103 (1972).

The legislative history of this section is pertinent to the present case and is reviewed in the concurring opinion of Marshall, J., in US v. Generes, 405 US 93, 109-110 (1972).

Cf. United States v. Generes, 405 U.S. 93, 103 (1972).

The dominant motive test was adopted by the Supreme Court in United States v. Generes, 405 U.S. 93, 103 (1972): We conclude that in determining whether a bad debt has a “proximate” relation to the taxpayer’s trade or business, as the Regulations specify, and thus qualifies as a business bad debt, the proper measure is that of dominant motivation, and that only significant motivation is not sufficient. * * * The determination of petitioner’s dominant motive is essentially a f…

United States v. Generes, 405 U.S. 93, 103 (1972), rehearing denied 405 U.S. 1033 (1972).

See *1001 Generes, 405 U.S. at 110-111 , 92 S.Ct. at 836-37 (Marshall, J., concurring); Kelson, 503 F.2d at 1294 .

See United States v. Generes, 405 U.S. 93, 101 , 92 S.Ct. 827 , 31 L.Ed.2d 62 (1972). 2.

See United States v. Generes, 405 U.S. 93, 100 , 92 S.Ct. 827 , 31 L.Ed.2d 62 (1972) (a “taxpayer’s dual status relative to the corporation ... [as] both a shareholder and an employee ,.. occasion different tax consequences.”).

See United States v. Generes , 405 U.S. 93 , 103 , 92 S. Ct. 827 , 31 L.

See United States v. Generes, 405 U.S. 93, 104 , 92 S.Ct. 827 , 31 L.Ed.2d 62 (1972); Aronson v. Internal Revenue Service, 973 F.2d 962, 966 (1st Cir.1992).

French v. United States , 487 F.2d 1246 , 1248-1249 (1st Cir. 1973) ; see United States v. Generes , supra at 104 ; Benak v. Commissioner , 77 T.C. 1213 , 1216-1217 (1981) ; Gillespie v. Commissioner , 54 T.C. 1025 , 1032 (1970) , affd. 30 AFTR2d 72 -5574, 72-2 USTC par. 9742 (9th Cir. 1972).

See id. at 103 , 92 S.Ct. 827 ; e.g., Adelson v. United States, 12 Cl.Ct. 231, 235 (1987).

See United States v. Generes, 405 U.S. 93 , 96 , 31 L.

See United States v. Generes, 405 U.S. 93 , 31 L.

See United States v. Generes, 405 U.S. 93 , 103 , 31 L.

See United States v. Generes, 405 U.S. 93 , 103 , 31 L.

See United States v. Generes, 405 U.S. 93 , 103-104 , 31 L.

Putoma Corp. v. Commissioner , 66 T.C. 652 , 673 (1976) , affd. 601 F.2d 734 (5th Cir. 1979) ; see United States v. Generes, supra .

See United States v. Generes, 405 U.S. 93, 103 (1972) (discussing the consistency of the meaning of “trade or business” across sections 162, 166, and 165); see also Bick v. 10 [*10] Commissioner, T.C.

ECF No. 54 ¶ 57; see Generes, 405 U.S. at 95–96 (contrasting nonbusiness debt with debt incurred in a trade or business).

See United States v. Generes, 405 U.S. 93, 100 (1972)(a "taxpayer's dual status relative to the corporation ... [as] both a shareholder and an employee ... occasion different tax consequences.").

See United States v. Generes, 405 U.S. 93 , 106 (1972) .

See United States v. Generes , 405 U.S. 93 , 95-96 ↩ (1972) . 4.

See United States v. Generes, supra at 103-104 .

See United States v. Generes , 405 U.S. 93 ↩ (1972) .

See United States v. Generes , 405 U.S. at 103 , where the Supreme Court in adopting the test from Whipple v. Commissioner , supra , commented: We conclude that in determining whether a bad debt has a "proximate" relation to the taxpayer's trade or business, as the Regulations specify, and thus qualifies as a business bad debt, the proper measure is that of dominant motivation, and that only significant motivation is not sufficient. * * * Even if petitioner had received the …