A corporation owned by the taxpayer and his wife wholly owned a trucking corporation ("D & N"), and his son wholly owned a small business corporation ("Mitchco"). After Mitchco started experiencing financial pressure from its bank, the taxpayer agreed to guarantee a loan that previously had been received by Mitchco from the bank, and ultimately paid on the guarantee, reporting the payment as a business investment loss. The taxpayer testified (at para. 19) that he gave the guarantee in order "to keep Mitchco in business so that ... D & N could collect its receivable." V.A. Miller J. stated (at paras. 43-44):
I find that the Appellant has shown that one of his purposes for signing the guarantee in July 1996 was to support the continued existence of Mitchco, and thereby protect and collect a very significant source of earnings for D & N and for himself.
This purpose was not too remote to satisfy the requirements of subparagraph 40(2)(g)(ii) of the Act.