Carl E. Jones and Elaine Y. Jones - Page 11

                                                -11-                                                  
            $11,374, and his indebtedness to INI was increased by that same                           
            amount.                                                                                   
                  When Carlsgate went out of business in 1991, petitioners                            
            each reported one-half of the remaining loan balance, $5,131                              
            (total $10,262), as long-term capital gain income from the                                
            exchange of their stock.                                                                  
                  Through a series of similar assumptions and transfers                               
            executed by journal entries, on December 31, 1991, petitioner was                         
            indebted to INI, his sole remaining corporation, for $980,527.                            
            Issue 1. Whether Petitioner's Withdrawals From Development in                             
            1989, 1990, and 1991 Were Taxable Distributions                                           
                  Respondent determined that Development made distributions to                        
            petitioner that exceeded his stock basis by $298,622, $261,591,                           
            and $224,827 for 1989, 1990, and 1991, respectively.  In                                  
            addition, respondent determined that in 1989 petitioner received                          
            $8,854 of dividends that Development distributed from its C                               
            corporation accumulated earnings and profits.  Petitioner asserts                         
            that with respect to all of the years at issue, the withdrawals                           
            were loans that Development made to him.                                                  
                  1989                                                                                
                  On January 1, 1989, Development had $8,854 of accumulated                           
            earnings and profits on its books and records that it earned when                         
            it was a C corporation.  According to the loan summary prepared                           
            by petitioner's accountants, the 1989 beginning balance in                                
            Development's loans to shareholder account was $427,368.                                  





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011