- 19 -
(2d Cir. 1969), affg. on this issue and revg. T.C. Memo. 1967-
174; Grosshandler v. Commissioner, supra at 19-20.
Petitioner's asserted during his testimony that he relied on
Lipton, Onofrio, and Timbie to prepare his tax returns. With
respect to the purported loans, he testified:
a significant portion of the proceeds that I received
from the Bergman & Barth firm, which, in the aggregate,
deferred compensation and capital gains, et cetera,
aggregated close to $400,000, to the best of my
knowledge, was rerouted, in other words, through the PC
and other entities.
In other words, loans were made by myself
individually to the PC and to the other related
entities from the proceeds that I realized on the
Bergman & Barth sale. So that obviously if one were
dealing with just the checks that were written to me,
number one, they don't reflect rather significant
loans, which I believe at least a significant part of
the interest has been checked and allowed by the IRS.
And, also, as I say, it doesn't reflect the good
part of the $400,000 that got rerouted, in other words,
through those accounts. So it was those analysis, in
other words, that I went through with Mr. Timbie and
with Mr. Onofrio, in other words, to present the
clearest picture. And the main point of focus that
Mr. Timbie had with respect to the loans and I think
which lead to the statements being attached to the
returns was the issue in subsequent years, years
subsequent to 1980.
What happened was--let me take that back. What
happened is in the early years, there was a credit
balance running from the entities to me. In other
words, I lent them more money than they lent me and
they were repaying it. There was a time when it ran
the other way, in other words, where I owed them and
the matter ultimately was repaid in years subsequent to
1980. The repayment years were primarily, I believe,
1984 and 1985.
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