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properties for sale or rent as potential relocation sites. But
there is no evidence of negotiations for specific properties
besides the Mira Loma parcel at any time during the years at
issue.
On its U.S. Corporation Income Tax Returns, Forms 1120,
petitioner reported the following receipts and expenditures for
each taxable year:
Taxable Depr. NonresidentialDepr.
Year Ended Gross Legal Repair Real Property Equipment
August 31 Receipts ExpensesExpenses Improvement Costs Costs
1985 $117,092 $1,014 $6,592 --- $12,491
1986 192,046 19,174 3,074 --- 19,036
1987 635,823 51,243 12,656 --- ---
1988 1,483,367 24,501 11,331 --- 255,358
1989 1,780,816 52,951 22,420 --- 8,332
1990 2,157,610 11,306 17,582 $7,125 34,448
1991 2,036,202 4,316 21,394 --- 17,078
1992 1,568,110 14,649 24,823 352,420 130,523
Petitioner made no distributions to its shareholders before
TYE 8/31/91. In that year it distributed $65,000 as a dividend.
In the following taxable year it distributed a dividend of
$50,000. During the years at issue petitioner made sizeable loans
to other corporations within the Mohney Group. With the
exception of the loan it made to MIC in order to help finance the
acquisition of parking space for the use of petitioner’s patrons,
no connection between these loans and petitioner’s business is
apparent from the evidence. Petitioner's loans to affiliates for
purposes unrelated to its business totaled at least $50,000 in
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