Cir

MEMORANDUM **

John C. Ramig and Margaret T. Ramig appeal a decision of the Tax Court denying them bad-debt deductions for advances made to ShoeS4Work and other payments made on behalf of the company. Determination of whether an advance to a business is debt or equity is a finding of fact reviewed for clear error. Bauer v. Comm’r, 748 F.2d 1365, 1367 (9th Cir.1984). We affirm.

It was not clearly erroneous for the tax court to determine that the $29,600 in advances was not a bona fide debt. The tax court determined that the balance of *758 the factors identified in A.R. Lantz Co. v. United States, 424 F.2d 1330, 1333 (9th Cir.1970), favored a conclusion that the advances were equity rather than debt. Perhaps most importantly, the financial condition of the company was such that repayment could not be expected from the company’s earnings. Lending was not available from an outside source, so repayment was dependent on the company raising more capital. That weighed against a characterization of Ramig’s advances as bona fide business loans. Though factors favoring debt may have made the issue a close call, “[w]here there are two permissible views of the evidence, the factfinder’s…

concurring in part and dissenting in part:

I agree with the majority that the Tax Court was within its discretion in finding that the unpaid promissory notes and the unreimbursed lease payments were not proven to be deductible. Although other judges might have come to a contrary conclusion, the court’s ruling was supported by adequate evidence and reflected a correct understanding of the law.

The same cannot be said of the Tax Court’s treatment of the unreimbursed business expenses charged to Ramig’s credit card. Ramig’s key evidence on this point was his written employment agreement that authorized him to incur expenses for the company up to a certain amount. Pursuant to this agreement, he expected to be reimbursed. The Tax Court did not even mention this provision *759 of the agreement, much less analyze its effect. For this reason, the Tax Court’s ruling regarding the credit card charges is not entitled to deference. As I see it, both the explicit terms of the agreement as well as ordinary business practice compel the conclusion that Ramig expected and was contractually entitled to reimbursement of business expenses he charged to his personal credit card on behalf of the…

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS FILED

FOR THE NINTH CIRCUIT OCT 24 2012

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

JOHN C. RAMIG, No. 11-73898

Petitioner - Appellant, Tax Ct. No. 29149-

v.

MEMORANDUM*

COMMISSIONER OF INTERNAL

REVENUE,

Respondent - Appellee.

Appeal from a Decision of the United States Tax Court

Submitted October 11, 2012** Portland, Oregon

Before: SILVERMAN, CLIFTON, and N.R. SMITH, Circuit Judges.

John C. Ramig and Margaret T. Ramig appeal a decision of the Tax Court

denying them bad-debt deductions for advances made to ShoeS4Work and other

payments made on behalf of the company. Determination of whether an advance to

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). a business is debt or equity is a finding of fact reviewed for clear error. Bauer v.

Comm’r, 748 F.2d 1365, 1367 (9th Cir. 1984). We affirm.

It was not clearly erroneous for…