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books and records as a repayment of principal and as a payment of
interest with regard to the funds that petitioners had
transferred to UI in 1986 and 1987. On the handwritten ledger
that he maintained, UI’s accountant deducted from the balance
reflected for the funds UI received from petitioners during 1986
and 1987 the amount of funds UI paid to petitioner during 1987
that purportedly represented the repayment of principal.
Apart from the $42,000 that was paid by UI to petitioner in
1987, petitioners were not paid any other funds by UI as salary
or otherwise.
Beginning in 1988, Wilcox apparently made periodic loans to
UI that were handled informally between the parties. UI’s
accountant recorded these loans as such on UI’s books and
records, and UI repaid some of Wilcox’ loans in full.
On March 31, 1989, 2 years after petitioners’ 1987 transfers
to UI, UI executed a promissory note (1989 promissory note) with
regard to the $197,475 in funds transferred by petitioners to UI
in 1986 and 1987. On the 1989 promissory note, petitioners’
family trust was indicated as the creditor. The 1989 promissory
note reflected a debt principal of $184,874, the balance
reflected on the accountant’s handwritten ledger as of March 31,
1989, with regard to funds UI had received from petitioners.
The 1989 promissory note reflected a term of just under 2
years with a maturity date of January 1, 1991. The 1989
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Last modified: May 25, 2011