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Demetree and Associates to David and his family. David and Ms.
Hinkle’s testimony established that the disbursements were not
made or intended to be made for any services rendered and that
David was under no obligation to perform services. See Bogardus
v. Commissioner, 302 U.S. 34, 36-37 (1937) (holding that the
controlling factor to distinguish between a gift and compensation
is the intent of the payor). Rather, the transfers to David were
consistent with Arthur and Naomi’s established pattern of making
frequent and substantial gifts and loans to David and his family.
Accordingly, we reject respondent’s determinations relating to
1983, 1984, 1985, 1986, 1987, 1988, 1989, and prior to Arthur’s
death in 1991. David, however, failed to report income relating
to his 1991 and 1992 property management activities. See sec.
61(a); James v. United States, 366 U.S. 213, 219 (1961).
Therefore, we sustain respondent’s determinations relating to
those years.
B. The Brahman Inn
Respondent contends that the amounts Ms. Hinkle transferred
to David were compensation for his management services related to
the Brahman Inn. David and Ms. Hinkle’s testimony established
that the amounts he received were loans and that the management
responsibilities relating to the Brahman Inn were handled by an
onsite manager and supervised by Demetree and Associates.
Accordingly, we reject respondent’s determinations.
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