                                                                                   PUBLISH

               IN THE UNITED STATES COURT OF APPEALS
                      FOR THE ELEVENTH CIRCUIT

                          -------------------------------------------
                                                                               FILED
                                                                       U.S. COURT OF APPEALS
                                       No. 98-8298                       ELEVENTH CIRCUIT
                                                                              03/05/99
                          --------------------------------------------    THOMAS K. KAHN
                                                                               CLERK
                              D. C. Docket No. 24341-95


ROBERT R. PLANTE and MARY B. PLANTE,

                                                            Petitioners-Appellants,

     versus

COMMISSIONER OF INTERNAL REVENUE,

                                                            Respondent-Appellee.


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                           Appeal from the Decision of the
                             United States Tax Court

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                                     (March 5, 1999)



Before EDMONDSON and BLACK, Circuit Judges, and RESTANI*, Judge.



_______________

*    Honorable Jane A. Restani, Judge, U.S. Court of International Trade, sitting
     by designation.
PER CURIAM:

     Taxpayers, Robert Plante and Mary Plante, appeal the tax


court’s decision that they are not entitled to a business bad-debt


deduction for 1991 and the associated carryover losses to later


years. We see no reversible error and affirm.




                          BACKGROUND




     In 1987, Robert Plante (Plante) purchased a marina. He


then transferred all of the marina’s assets to Boating Center


of Baltimore, Inc. (BCBI): Plante was president and sole


shareholder of BCBI. Then, Plante transferred a total of


                                2
$320,000 to BCBI, evidenced by promissory notes. Over the


next four years, Plante advanced another $155,000 to BCBI.


These advances were not recorded as promissory notes.


     BCBI suffered heavy losses; so, Plante decided to sell the


business. Preliminary negotiations with a buyer resulted in a


selling price of $1,050,000. At closing, on 20 December 1991, the


buyer learned about the $475,000 in advances Plante made to


BCBI: advances reflected in BCBI’s books as a liability to


Plante. When the buyer insisted that liability from BCBI to


Plante be eliminated, the parties, in Maryland, added this


provision to the Stock Purchase Agreement:




                                  3
     The shareholder, as the sole Shareholder and as


President of the Corporation, hereby makes the


following representations . . .




          Shareholder has transferred Four


     Hundred Seventy-Five Thousand ($475,000.00)


     Dollars of notes and accrued interest of the


     Corporation due Shareholder as of 11/1/91 to


     the equity account of the Corporation and


     has made this an irrevocable capital


     contribution to the Corporation. The notes,


     accrued interest and capital lease due
                            4
          Shareholder as of the Closing have been


          tendered to Buyer in exchange for Buyer


          notes.




     In this appeal, Plante asks us to treat the $475,000 as a


bad debt, instead of a capital contribution because this


treatment would allow him to pay less tax. The Tax Court,


however, treated the $475,000 as a capital contribution and


ordered Plante to pay the IRS $8,849.




                          DISCUSSION
                                5
      We must determine whether the $475,000 Plante advanced to


BCBI was a loan or a capital contribution. We usually apply a 13-


factor test to make this determination.            See Lane v. United


States, 742 F.2d 1311, 1314-15 (11th Cir. 1984).


      After “[t]aking into account the [thirteen] factors,” the Tax


Court decided that the $155,000 not evidenced by promissory notes


was not deductible. The Tax Court reasoned that Plante failed to


carry his burden of proof on his claimed deduction because Plante


provided “virtually no information regarding $155,000 of the


amount here in dispute[.]”




                                       6
      We do not need to decide today, however, if the Tax Court


correctly applied the 13-factor test to the sum not tied to

                  1
promissory notes. The Tax Court’s decision -- based on a different


theory -- about the $320,000 evidenced by promissory notes that


Plante advanced to BCBI applies with equal force to the full




  1
   Two considerations make us hesitant to review the Tax
Court’s application of this test. First, the Tax Court did not
provide a written explanation for its application of the
factors. Second, the Tax Court did not make explicit findings on
the corporate books, interest payments, and testimony of
Plante suggesting that the advances, at a time before the sale,
were loans.
                                 7
                                       2
amount ($475,000) claimed by Plante        and provides sufficient


grounds to affirm the Tax Court’s decision.


      When a taxpayer characterizes a transaction in a certain


form, the Commissioner may bind the taxpayer to that form for


tax purposes. See Bradley v. United States, 730 F.2d 718, 720 (11th


Cir. 1984).   This is the rule: “[a] party can challenge the tax


consequences of his agreement as construed by the Commissioner


only by adducing proof which in an action between the parties


would be admissible to alter that construction or to show its


unenforceability because of mistake, undue influence, fraud, duress,


  2
   Before the Tax Court, “[n]either party ma[de] a distinction
between the portion of the $475,000 in unpaid advances
represented by notes and the remaining portion.”
                                 8
           3
et cetera.” Id. This rule is named the Danielson rule after a case


in which the rule was applied. See Commissioner v. Danielson, 378


F.2d 771, 775 (3d Cir. 1967).


      The Tax Court invoked the Danielson rule when it said that the


Stock Purchase “[A]greement clearly makes the disposition of the


notes part of the sale transaction and characterizes their



  3
   In his brief, Plante asserts that he “went along with the
changes [to the Stock Purchase Agreement] because he was under
duress.” Plante, however abandoned a true duress claim during
oral argument by saying: “First of all, the taxpayer here does
not assert that . . . there was any duress or overreaching in the
transaction with the buyer.” Even when we consider what
Plante has called a duress argument, we must reject it as
meritless: general economic hardship is not “duress” for legal
purposes. See Lee v. Flightsafety Servs. Corp., 20 F.3d 428, 432
(11th Cir. 1994); Blumenthal v. Heron, 274 A.2d 636, 640-41 (Md. 1971).
                                   9
disposition as a contribution to BCBI’s capital.” We agree with


the Tax Court that Plante characterized his advances to BCBI as


capital contributions and may not now obtain the tax benefits


of treating the advances as loans to BCBI.


     The Stock Purchase Agreement is unambiguous: “[Plante] has


transferred . . . $475,000.00 . . . of notes and accrued interest of


the Corporation due [Plante] as of 11/1/91 to the equity account of the


Corporation and has made this an irrevocable capital


contribution[.]” (emphasis added). This sentence characterizes


Plante’s advances as a capital contribution.


     Plante, however, makes two arguments attempting to avoid


the Danielson rule.      First, he says that the Stock Purchase
                                  10
Agreement is ambiguous in characterizing his advances as


capital contributions and that, therefore, we must use evidence


extrinsic to the Agreement to decide if the advances were capital


contributions or loans.     He says the Agreement is ambiguous


because the second sentence of the Agreement conflicts with the


first sentence. If the debt were transferred to equity on 11/1/91,


according to Plante, then Plante could not own the notes he


purported to transfer on 12/20/91.


     We disagree. We do not think the first sentence means that


the advances were made to equity on 11/1/91. We think “as of 11/1/91”


is the date for calculating BCBI’s liability, not the date of the


capital transfer because “as of 11/1/91” immediately follows “due
                                 11
             4
[Plante].”       And, if “as of 11/1/91” meant the transfer took place on


1 November, the Agreement would probably be written “on 11/1/91.”


Also, if the advances were transferred to equity on 1 November,


as Plante contends, then the buyer would not have been concerned


about BCBI’s potential liability to Plante on 12/20/91. So, the


advances were made into capital contributions on 20 December


1991.




   4
    This reading is consistent with a stipulation agreed to by
Plante and the IRS: “As of November 1, 1991, the petitioner had
unpaid advances to the corporation totaling $475,000.00.”
Also, the preamble to the stipulation
makes clear that the IRS did not agree
that use of the word “advance” means
“loans for federal income tax purposes.”
                                      12
      Regardless of whether the advances were debts at one time,


the   advances    were   characterized     at   closing   as   capital


contributions. Tendering the “notes, accrued interest and capital


lease” to the buyer -- the words of the second sentence of the Stock


Purchase Agreement -- was a way to implement the buyer’s and


seller’s plan to extinguish potential debts of BCBI to Plante. No


inconsistency or ambiguity, therefore, exists in the pertinent


provision. Having made his decision to treat the advances to


BCBI as capital contributions to close the million-dollar deal,


Plante cannot now look for recoupment from the IRS.


      Plante’s second argument to avoid the Danielson rule is that


the Danielson rule should not apply in this case. He notes, correctly,
                                  13
that one purpose of the Danielson rule is to prevent the IRS from


being “whipsawed”: litigating against two parties, like Plante and


BCBI, to collect tax from only one party. Plante asserts BCBI was


insolvent. Then, he argues that the Danielson rule does not apply


if the corporation was insolvent before and after the notes were


canceled because “cancellation of the debt will not result in a


taxable income to BCBI.” No danger of “whipsaw” exists, therefore,


says Plante.


     The record is not plain that BCBI was insolvent before and


after the sale.   In any event, the Danielson rule has other


purposes, however, that are applicable to this case. “If a party


could alter the express terms of his contract by arguing that the
                                14
terms did not represent economic reality, the Commissioner would


be required to litigate the underlying factual circumstances of


‘countless’ agreements.” North Am. Rayon Corp. v. Commissioner,


12 F.3d 583, 587 (6th Cir. 1993). Also, business agreements are often


structured with an eye toward the tax consequences of the

             5
agreement.       Allowing one party to realize a better tax


consequence than the consequence for which it bargained is to


grant “a unilateral reformation” of the agreement, which




  5
   The Stock Purchase Agreement was negotiated with an eye to
the tax consequences. According to Plante’s brief: “The terms of
the Stock Purchase Agreement were dictated by [the buyer] to
gain tax and other advantages.”
                                 15
                                                                     6
considerably undermines the certainty of business deals.


Danielson, 378 F.2d at 775.


      Plante raises a number of other arguments in Sections A, E,


and F of his brief, as well as arguments about other


interpretations    of   the   Danielson   rule,   about   alternate


constructions of the Stock Purchase Agreement, and about


extrinsic evidence. We have considered these arguments, but we

                                     7
cannot agree with the arguments.



  6
   We think these reasons for the Danielson rule also refute
Plante’s arguments based on Comdisco, Inc. v. United States, 756
F.2d 569 (7th Cir. 1985) (investment-tax-credit case).

  7
   We are unpersuaded by Plante’s arguments based on Giblin v.
Commissioner, 227 F.2d 692 (5th Cir. 1955). Giblin is
distinguishable from this case because Giblin’s debt cancellation,
                                16
     We conclude that Plante’s advances were a capital


contribution and, therefore, Plante was not entitled to a business


bad-debt deduction and associated carryover losses.


     We AFFIRM.




apparently, was not specifically characterized as a capital
contribution and because it was clear from the Giblin record --
as it is not clear here -- that the corporation was insolvent
before and after the cancellation. We are more persuaded by
Lidgerwood Mfg. Co. v. Commissioner, 229 F.2d 241 (2d Cir. 1956).
Also, Giblin pre-dates our adoption of the Danielson rule. See
Spector v. Commissioner, 641 F.2d 376 (5th Cir. 1981).
                                 17
