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D. Petitioner Corporation’s Transfer of Funds to Petitioner
Petitioner corporation transferred an amount of funds not
specified in the record to petitioner before and during its 1987
tax year. Petitioner corporation’s minutes for April 15, 1981,
stated that it would lend money to petitioner as needed at a 9-
percent interest rate. Petitioner corporation did not require
and petitioner did not give collateral for any transfers of funds
from petitioner corporation to him. Petitioner did not pay
interest to petitioner corporation on the transfers at issue or
for any prior transfers. There was no limit on the amount
petitioner could borrow from petitioner corporation. The
purported loans had no maturity dates. Petitioner executed no
notes evidencing debt to petitioner corporation.
Petitioner corporation has never formally declared or paid
dividends to petitioner.
E. Petitioner’s 1987 Tax Return
Petitioner filed his 1987 income tax return on June 14,
1989. He claimed a $463,881 capital loss, and a long-term
capital gain of $3,898, from his 1987 sales of 26 different
securities, including Texaco, Exxon, Navistar, Crazy Eddies, Chi-
Chi’s, and ZZZZ Best. The loss included a $531,480 net loss from
his sales of ZZZZ Best stock. He filed an amended 1987 return on
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