15
Petitioner bears the burden of proof to establish facts that will
support his position, that there was a debt owed by DRPC to
petitioner and one from petitioner to Frost Bank. Although these
notes are evidence of such a debt, in light of the other
objective circumstances present, we fail to find that petitioner
has established that there was an actual, substantive debt owed
by DRPC to petitioner.
We now turn to whether petitioner was an accommodation
party. In Harrington v. United States, 605 F. Supp. 53 (D. Del.
1985), the taxpayers' basis in their stock of a corporation at
the end of the 1980 tax year was $2.50, but they claimed that
they had a pro rata share of indebtedness to shareholders of
$5,000. During 1980, the taxpayers and four other shareholders
executed a $200,000 note to secure a credit line with a bank.
The proceeds were to be used for equipment for the corporation,
which was added as a signatory to the note at the insistence of
the bank to enable the bank to get a lien on the equipment. The
wives of the shareholders were also added to the note at the
insistence of the bank. The court, quoting Raynor v.
Commissioner, 50 T.C. 762, 770-771 (1968), stated that "'No form
of indirect borrowing, be it guaranty, surety, accommodation,
comaking or otherwise, gives rise to indebtedness from the
corporation to the shareholders until and unless the shareholders
pay part or all of the obligation'". Harrington v. United
States, supra at 56. The taxpayers argued that since they
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011