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petitioners' Common Stock Investment. As mentioned, the
promissory notes from Riviera to petitioners indicate $87,564.84
of loans from petitioners to Riviera as of August 31, 1979.
Petitioner husband could not explain this discrepancy.
Petitioners have no records of amounts Riviera may have repaid to
petitioners.
The second business entity petitioners allege to be related
to their $205,029 bad debt deduction is Arizona Marine. Arizona
Marine was engaged in the repair and sale of recreational boats.
In November 1977, petitioners sold Arizona Marine to Mr. and Mrs.
Richard Reed. The Purchase and Sale Agreement executed by
petitioners and the Reeds provided that the Reeds purchased "all
of the fixtures and equipment, inventory, goodwill, customer
lists and relationships, leasehold rights", as well as all rights
to the names "Arizona Marine", "Arizona Marine Boat and Motor
Sales and Service", and "Arizona Marine Water Sports Center".
The Purchase and Sale Agreement did not specifically assign a
dollar value to each of these assets. Rather, the agreement
refers to these assets collectively as the "Business Assets", and
states that the purchase price for the Business Assets is
$202,110.
As part of the purchase, the Reeds executed a promissory
note, payable to petitioners, in the amount of $133,866.
Petitioner husband testified petitioners realized roughly a
$30,000 profit on this sale. Petitioner husband also testified
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