- 11 - Trust states that Sanwa Bank, as the beneficiary, would receive payment of an indebtedness in the amount of $400,000. On February 6, 1990, Sanwa Bank presented the escrow company with a demand note as well as the original, unrecorded, Deed of Trust for petitioner's home. It was Sanwa Bank's understanding that the escrow company would disburse $400,000 to Sanwa Bank at the close of escrow. On March 2, 1990, petitioner's home was sold for $1,225,000, and Sanwa Bank received $400,000 from the sale proceeds. Sanwa Bank applied the funds distributed from the escrow company toward the floor plan loan. Ultimately, however, on April 30, 1990, Sanwa Bank did not renew the floor plan loan, and, instead, foreclosed on petitioner's auto dealership and liquidated and sold the assets. Afterwards, Sanwa Bank sought payment for the approximately $1.1 million outstanding balance due on the floor plan loan. Petitioner did not receive any of the foreclosure proceeds. On the auto dealership's Federal income tax returns for the 1987 through 1990 tax years, it reported the following: Years Gross Receipts Gross Profit Total Income1 Taxable Income 1987 $27,674,310 $3,010,606 $3,959,332 $43,644 1988 35,089,014 3,587,666 4,554,151 (271,712) 1989 35,522,931 4,101,084 4,889,409 (570,637) 1990 4,713,561 588,810 239,916 (699,459) 1This column reflects gross profits plus other income such as cash discounts, miscellaneous income, finance and insurance income, as well as service contracts.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011