- 22 -
to assist CPI to develop the computer component and
eventually to obtain an equity interest in CPI. He
testified as follows:
Very simply, I think we were advancing monies
for the use of CPI to develop its product and
we would eventually own part of CPI. That was
our goal, was to own part of Communication
Processors, Inc. That would be a product, the
company developed a product and that's what
we're interested in.
Based upon Mr. Flaherty's testimony, we do not credit the
statement contained in his letter of September 18, 1991,
that Weeden made the subject advances "as loans, to
Whelpley Associates, Inc. and yourself". We find that
Weeden made the subject advances either as loans to CPI or
contributions to CPI's capital. Weeden issued the checks
to WAI, but it did so on behalf of CPI, and it did not
intend the advances to be loans to WAI or contributions
to WAI's capital.
For the above reasons, we reject petitioners'
position that WAI's income for 1987 should be reduced
in the amount of $103,693, and, thus, we accept
respondent's determination that the aggregate amount of
Weeden's advances is includable in WAI's income in 1987.
In reaching this result, we note that the record suggests
that CPI constructively received the subject moneys from
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011