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$42,000 to pay salaries of its employees, rent, and other
business expenses of UI.
The following schedule reflects the dates and amounts of
petitioners’ 1986 and 1987 transfers of funds to UI:
Date Funds Transferred
10/14/86 $155,475
03/03/87 18,000
04/01/87 24,000
Total $197,475
At the time of petitioners’ 1986 and 1987 transfers of funds
to UI, no documentation, such as loan agreements or promissory
notes, was drafted or executed by petitioners or by UI with
regard to the funds petitioners transferred to UI.
An informal understanding existed between petitioner and the
officers of UI that petitioners’ 1986 and 1987 transfers of funds
to UI would be repaid by UI to petitioners only out of UI’s
future profits.
At petitioner’s direction, beginning with the 1986 transfer,
UI’s accountant maintained a handwritten ledger showing a running
balance for the total funds that petitioners transferred to UI.
On the handwritten ledger, periodic entries were made to reflect
the accrual of alleged interest on the funds that petitioners
transferred to UI in 1986 and 1987.
During 1987, petitioner was paid approximately $42,000 by
UI. At petitioner’s direction, this $42,000 was treated on UI’s
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Last modified: May 25, 2011