15. In regard to Count I, the Court finds that profit was not the taxpayer's primary or substantial motive in making the payments to Mr. Strong and others for the promotion of the Moscow Dam Project. Arata v. Commissioner of Internal Revenue, 2 Cir., 277 F.2d 576 (1960); Ewing v. Commissioner of Internal Revenue, 2 Cir., 213 F.2d 438 (1954). 16. The Court finds that taxpayer's motives over the twenty-two year period when the donations were made included, besides a hope for profit, the motive of civic or community betterment, the motive to continue a project in which taxpayer's father had believed in and supported and the motive that developed in the latter years to try and recapture what he had already expended.

I.R.C. § 216(b)(1)(B). “As a general rule,” because “a corporation and its stockholders are deemed separate entities,” New Colonial Ice Co., 292 U.S. at 442, 54 S.Ct. 788, losses incurred by a corporation are not normally deductible by its stockholders, see, e.g., Arata v. Commissioner of Internal Revenue, 277 F.2d 576, 578 (2d Cir.1960); Watson v. Commissioner of Internal Revenue, 124 F.2d 437, 439 (2d Cir.1942). Section § 216(a) of the Code, however, allows tenant-stockholders to deduct their respective shares of a co-op's mortgage and real estate interest expenses.

Indeed, at the time § 108 was enacted, the proposition was so well settled that every court which had considered the issue had held that a taxpayer is not entitled to a loss under § 165(c)(2) (or its predecessors) unless the primary or dominant motive for entering into the transaction was profit. See King, 545 F.2d at 708; Knetsch, 348 F.2d at 936 938; Austin, 298 F.2d at 584; Arata v. Comm'r, 277 F.2d 576, 578-79 (2d Cir. 1960); Ewing v. Comm'r, 213 F.2d 438, 439 (2d Cir. 1954), aff'g, 20 T.C. 216, 233 (1953); Fox v. Comm'r, 190 F.2d 101, 104 (2d Cir. 1951); Feine v. McGowan, 188 F.2d 738, 740 (2d Cir. 1951); Weir, 109 F.2d at 997-98. It is true that a recent tax court decision subsequent to the passage of § 108 indicates that another factor must be considered in applying the primary motive test to transactions in which a loss is incurred predominantly for tax-avoidance.

This court has repeatedly held that, in determining the deductibility of a loss, the primary motive must be ascertained and given effect. Arata v. Commissioner, 277 F.2d 576, 578-579 (2d Cir. 1960); Ewing v. Commissioner, 213 F.2d 438, 439-440 (2d Cir. 1954); Meurer v. Commissioner, 221 F.2d 223 (2d Cir. 1955). Cf. Gevirtz v. Commissioner, 123 F.2d 707 (2d Cir. 1941).

Interstate Transit Lines v. Commissioner, supra; Deputy v. Dupont, supra. See also Schleppy v. Commissioner, supra; Arata v. Commissioner, 277 F.2d 576 (2d Cir. 1960), revg. in part and affg. on this issue 31 T.C. 346 (1958).

On the other hand, petitioner contends that the payment on December 18, 1958, was not gratuitous, and that he did not receive any equivalent benefit; Section 23(e)(2), I.R.C. 1939, which is substantially the same as present section 165(c)(2), was considered by this Court in George F. Arata, 31 T.C. 346 (1958), affirmed on this issue 277 F.2d 576 (C.A. 2, 1960). In that case we held that a deduction is not allowable unless the expectation of profit was the taxpayer's prime motive for entering into the transaction, and that the burden is upon the taxpayer to prove such factor.

" 338 U.S. at 565. Also, in Arata v. Commissioner of Internal Revenue, 277 F.2d 576, 579 (2d Cir. 1960), wherein the taxpayer failed to file a declaration of estimated income tax due in March 1953 and argued that his failure to file was due to an honest difference of opinion as to the amount of tax due and, furthermore, that he should not have been penalized as his final return for 1953 showed that a refund was due him, Chief Judge Lumbard, writing for the court, noted: "* * * nor does the fact that a refund may ultimately be due provided an excuse. * * *.