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repayment or efforts to secure the same.” In Austin Village,
Inc. v. United States, 432 F.2d 741, 745 (6th Cir. 1970), the
court relied on the fact that there was no unconditional promise
to repay the loans, no fixed schedule of payments, and no
security given for issuance of the loans.
In the case at hand, none of the factors are present that
would tend to show that petitioner reasonably expected WSAI to
repay the “loan” in accordance with terms in line with those
generally prevailing in the business community. See Nassau Lens
Co. v. Commissioner, 308 F.2d 39 (2d Cir. 1962), remanding 35
T.C. 268 (1960). Moreover, no interest payments to petitioner
were made or provided for. See Texas Farm Bureau v. United
States, 725 F.2d 307, 313-314 (5th Cir. 1984). If petitioner had
been a true lender, he would have provided for interest payments.
Curry v. United States, 396 F.2d 630, 634 (5th Cir. 1968).
We find that petitioner’s $41,200 of deposits into the WSAI
checking account was a contribution to the capital of WSAI.
Because petitioner was a shareholder of WSAI, his $41,200 of
contributions to capital is reflected in an increased basis for
his WSAI stock. Sec. 1.118-1, Income Tax Regs. Thus,
petitioner’s basis in his WSAI stock was $41,450.15
15At trial, respondent produced copies of WSAI checks to
petitioner and to Camelot Court Development, Inc., and Camelot
Court Development, Inc. II, in the amounts of $5,000, $3,697, and
$57,703, respectively (Petitioner has a 45-percent interest in
(continued...)
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