Kenneth Graves was the sole shareholder and employee-manager of KPS Trucking Co., Inc. When KPS experienced financial difficulties, Mr. Graves loaned the corporation a total of $86,040 from his personal funds. The loan was never repaid, and it became worthless when KPS went bankrupt and its debts were fully discharged.
Mr. Graves appealed the Tax Court’s decision to classify the $86,040 as a business debt incurred in his business of being an employee. The Ninth Circuit Court of Appeals stated that ... Log in to view full article.