Bone v. Commissioner, T.C. Memo. 2001-43, 81 T.C.M. (CCH) 1199, 1202 (2001), aff'd, 324 F.3d 1289 (11th Cir. 2003). One common way for a taxpayer to satisfy this requirement is to show that its business would have faced "direct and proximate" adverse consequences had it not made the payment on behalf of the other person.Hood v. Commissioner, 115 T.C. 172, 181 (2000); see also Square D Co. v. Commissioner, 121 T.C. 168, 200 (2003); HIE Holdings, Inc. v. Commissioner, 97 T.C.M. (CCH) at 1740; W. Covina Motors, Inc. v. Commissioner, T.C. Memo. 2008-237, 96 T.C.M. (CCH) 263, 266 (2008), supplemented by T.C. Memo. 2009-291. "Where, as here, the payor and the beneficiary of the payment are a corporation and a controlling shareholder, the corporation's payment of the shareholder's expense is closely scrutinized, and the showing of the primary benefit to the corporation must be strong."

We are often called upon to resolve the question of which party an expense belongs to when determining whether an expense belongs to an owner or a business entity.See, e.g., Square S Co. v. Commissioner, 121 T.C. 168, 200 (2003). In these cases, the court determines whether the expense is directly connected to or is the proximate result of the business.

This exception typically applies only where the taxpayer pays the obligations of another person or entity in financial difficulty and where the obligor's inability to meet his obligations threatens the taxpayer's own business with direct and proximate adverse consequences. Hood v. Commissioner, 115 T.C. at 180-181; see also Square D Co. v. Commissioner, 121 T.C. 168, 200 (2003). "[T]he showing a corporation must make to deduct the expenses of its shareholder is a strong one."

acquisition of assets constituting a trade or business or substantial portion thereof"), (d)(1)(E) (covenants not to compete); (e)(3)(A)(ii) (Computer Software is not subject to section 197 if it "is not acquired in a transaction * * * involving the acquisition of assets constituting a trade or business or substantial portion thereof"); and (e)(7) (rights to service a mortgage are subject to section 197 if "acquired in a transaction * * * involving the acquisition of assets * * * constituting a trade or business or substantial portion thereof"). As "interest" is used outside the context of section 197, one who owns an "interest" may own a "fractional interest", see, e.g.,Estate of Mellinger v. Commissioner, 112 T.C. 26, 33 (1999), which might consist of a "minority interest", see, e.g.,Holman v. Commissioner, 130 T.C. 170, 183 (2008), or a "majority interest", see, e.g., Estate of Bongard v. Comissioner, 124 T.C. 95, 123 (2005), also referred to as a "controlling interest", see, e.g., Square D Co. Subs. v. Commissioner, 121 T.C. 168, 195 (2003); or one might own an "entire interest", Shepherd v. Commissioner, 115 T.C. 376, 378 (2000), affd. 283 F.3d 1258 (llth Cir. 2002). In Frontier Chevrolet we rejected the taxpayer's contention that only the acquisition of a new business triggered section 197(d)(1)(E).