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Year Amount
1973 $605,500.00
1974 387,876.45
1975 575,000.00
1976 265,000.00
We assume that respondent has conceded both higher sets of
figures and now argues for only those sums that were converted to
petitioner's personal use. These are the figures that are the
basis for our holding.
Petitioner argues that these withdrawals were not income
because they constituted loans to him allegedly with the "full
knowledge and agreement of Mr. Khalatbari". However, there is no
documentary evidence in the record to support such an argument.
Furthermore, Diesel Power financial statements do not reflect any
loans made to shareholders. Petitioner testified that the amount
that was owed became a part of the litigation with Diesel Power
and was part of the claim of right which he subsequently reported
as income. As we stated in Gilbert v. Commissioner, 74 T.C. 60,
65 (1980), the critical question in resolving the issue of
whether there is a loan "is whether there was a genuine intention
to create a debt, which, in turn, depends upon weighing such
objective factors as reasonable expectation of repayment and the
economic reality of the claimed debtor-creditor relationship."
Petitioner has not presented any evidence other than his
testimony or that of his employees to convince us that these
withdrawals were loans. There is no loan agreement or promissory
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