Deja Vu, Inc. - Page 5

                                        - 5 -                                         
          the note dated April 13, 1990.  Petitioner also advanced $11,968            
          to Adult Fun on March 9, 1990, for remodeling.  This advance was            
          reflected in the June 6, 1990, note.                                        
               In addition to the advances above, petitioner made the                 
          following cash advances to Adult Fun:                                       
                         Date                      Amount                             
                         May 2, 1990              $150                                
                         May 29, 1990             285                                 
                         Aug. 8, 1990               15                                
                                             Total   450                              
          Petitioner added these three cash advances onto the note dated              
          April 13, 1990.                                                             
               Petitioner did not require collateral, take back liens or              
          personal guarantees, or request to examine Adult Fun's books, tax           
          returns, or financial statements before or after making any of              
          the advances.  On its books, petitioner recorded the advances as            
          loans.  Adult Fun recorded the advances as debts.1  Adult Fun did           
          not make any payments on the Notes.                                         
               Adult Fun began a business under the name “Deja Vu Boutique”           
          sometime in May or June 1990.  Shortly after it opened,                     


               1 Adult Fun’s taxable year ended on Feb. 28.  With the                 
          exception of the advances and a $50 payable for State income                
          taxes, Adult Fun’s balance sheet on Feb. 28, 1991, listed no                
          liabilities.  The balance sheet on Feb. 28, 1991, listed assets             
          of $20,724, which were the leasehold improvements mentioned                 
          below.  Those improvements were the only asset that Adult Fun had           
          reported on a yearend balance sheet since Feb. 28, 1987.  Adult             
          Fun’s balance sheet on Feb. 28, 1987, listed total assets of                
          $1,077 and total liabilities of $106,192.  Adult Fun listed paid-           
          in capital of $6,000 on each of its yearend balance sheets from             
          Feb. 28, 1987 to Feb. 28, 1991.                                             



Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  Next

Last modified: May 25, 2011