- 3 -
1983, petitioner and her now former spouse owned 604 shares of
the corporation’s stock out of a total of 4,000 shares
outstanding.
On April 10, 1989, petitioner received a check made payable
to her in the amount of $50,000 and written on an account
maintained in the name of the corporation. The check memo line
contained the following notation: “10,000 gift 40,000 loan”.
Also on April 10, 1989, petitioner signed a promissory note
(note) in which she promised to pay the corporation $50,000. The
note was payable on demand and did not provide for the payment of
interest. Beneath petitioner’s signature was the typed
instruction to “SEE BACK”. The reverse side of the note
contained the following typed statement: “Unless sooner
terminated, as herein provided, upon the deaths of both Murl E.
Patterson and Dorothy E. Patterson, this note shall be
cancelled.” The Pattersons signed and dated that statement as of
November 21, 1991.
Petitioner made no payments on the note. On a Schedule L,
Balance Sheet, filed with its 1993 corporate income tax return3
3At trial, petitioner objected to the admission of the
corporation’s 1993 return and 1994 return on hearsay grounds. We
admitted the 1994 return under the so-called business records
exception to the hearsay rule. See Fed. R. Evid. 803(6). We
deferred ruling on her objection to the 1993 return. After
consideration, we admit the 1993 return also under the business
record exception to the hearsay rule.
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011