A second mortgage loan, and bonds issued to the taxpayer by a condominium building development, were found to be loans made in the course of carrying on a business (which was that of lending money) rather than earning income from property given that he had made 17 loans totalling $571,000 in the decade ending with the loans in question, there was a "continuity or system" in his lending activities in the sense that he kept track of interest payment due dates and outstanding balances, the loans were not remarkable for any feature that distinguished them from those made by a commercial money lender, and he mimicked the operations of other commercial lenders in that funds lent by him had been borrowed by him at a lower rate so that he was earning a spread and in taking security.
After noting that in MRT, ESG and Rockmore, 75 DTC 5224, aff'd 76 DTC 6156 "Walsh J. considered that each of the taxpayers were making loans to high-risk borrowers, investigated potential borrowers carefully, and negotiated extensively over terms, indicating that an active business of moneylending was being carried on" (para. 40), Rip J stated (at para. 42):
All three corporations operated on a very small scale, with Rockmore, for example, holding only three loans in 1972. Despite this, and despite the fact that none of the taxpayers undertook any advertising, the Courts held that not only were the taxpayers engaged in a business of lending money, they were engaged in an active business of lending money.