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of her position, petitioner offered the testimony of Mr.
Acquaviva, her son Christopher, who during the years in issue
served as Magnum's treasurer, and their accountant, Mr. Defalco.
Petitioner also presented copies of Magnum's automated general
ledger and accounting records as evidence of a bona fide debt.
Respondent contends that petitioner has not met her burden
of proof. Statements of intent must be considered in the context
of the surrounding circumstances. Williams v. Commissioner,
supra at 1034. What few formal indicia surrounded Mr.
Acquaviva's advances were minimized by the lack of other
objective factors to support the conclusion that they were loans.
Petitioner offered no evidence of indebtedness, e.g., loan
agreements, promissory notes, repayment schedules, or collateral
posted to secure the alleged loans. There was no interest
reflected in any of the 1986 and 1987 payments, nor was there any
evidence that these payments were made to satisfy a debt between
Magnum and Mr. Acquaviva. Petitioner did not introduce Magnum's
corporate minutes into evidence. Furthermore, Mr. Acquaviva, a
25-percent shareholder in Magnum, did not get formal
authorization from the other shareholders for the loans.
Petitioner has failed to prove that Magnum owed a bona fide debt
to Mr. Acquaviva.
Petitioner has not argued that Magnum lacked earnings and
profits during 1986 and 1987. See secs. 301, 316. We sustain
respondent's determination on this issue.
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