-22-
Petitioner alleged that he assumed much of the debt that
Development owed to petitioner's other wholly owned corporations.
These "assumptions" without actual payments are merely
bookkeeping entries designed to give the illusion of repayments.
Moreover, with regard to the loan amounts that were reclassified
as salary, we are mindful that petitioner had the authority to
determine the size of his salary. Petitioner's use of his salary
to credit his loan account was simply a bookkeeping entry
designed to give his withdrawals the color of loans. Id.
On the basis of our examination of the entire record, we
find that petitioner has not established that he entered into a
bona fide creditor-debtor relationship with Development at the
times of the withdrawals at issue. Petitioner simply used the
corporation as his own personal pocketbook, depositing and
withdrawing funds at will.
Petitioner argues on brief that, if this Court should find
that the withdrawals are not bona fide loans, then the amount of
the distributions subject to tax is the net amount by which the
distributions over the 3 years at issue exceed the total amount
of the repayments made over the same time period. Petitioners
cite Epps v. Commissioner, T.C. Memo. 1995-297, and Stovall v.
Commissioner, T.C. Memo. 1983-450, affd. 762 F.2d 891 (11th Cir.
1985), as authority for combining the years at issue and taxing
the net amount.
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