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the U.S. Small Business Administration. On page two of the
application, Mr. Tedford and petitioner listed loans due to them
from Border in the sum of $168,000 as an “Other Asset”.
In Border’s financial statement for Border’s fiscal year
ending on August 31, 1995, the balance sheet of Border shows an
item entitled “Long-term debt, shareholder $243,223", and the
footnotes on page 10, item 10 of the corporate financial
statement further disclose and discuss the shareholder loans to
Border in the sum of $243,223.
Border did not report any loans from shareholders on its
Form 1120 for the fiscal year ending August 31, 1994. However,
on its Form 1120 for the fiscal year ending August 31, 1995,
Border reported loans from shareholder of $243,223.
Border made no payments to Mr. Tedford and petitioner for
the amounts they transferred to the corporation. However, when
it was discovered that one of the transfers Mr. Tedford and
petitioner made had overpaid an invoice by $17,035, the
overpayment was returned to Mr. Tedford and petitioner.
Petitioner claimed the loans were consequently reduced from
$243,223 to $226,188.
No security was given for the sums Mr. Tedford transferred
and the expenses he paid for Border in 1994-95. Before Mr.
Tedford’s death, he and petitioner did not seek repayment of the
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