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consolidated filing year, and INI reported a long-term capital
gain of $165,073 from the sale.
3 Capital gain income of $56,630 from the sale of the Westfair
Townhouse No. 6 to Mrs. Jones; and other income of $1,219.
4 Income from State tax refund.
Although INI reported that its business purpose is real
estate development, it is clear from examining INI's returns that
since 1990 its only activities have been settling tax
liabilities, disposing of business assets, and holding
petitioner's loans. Furthermore, it has earned no gross
receipts, and its only income has been from the sale of its
assets and the return of previously deducted taxes. Moreover,
the reported amount of petitioner's indebtedness to INI as well
as its value relative to INI's other assets has remained very
high. In fact, petitioner's loan account is almost its only
asset. For instance, the reported value of the loans as a
percentage of the total value of its assets was 94.06, 99.99,
97.57, 97.38, 100, and 99.42 percent for fiscal years ending
1990, 1991, 1992, 1993, 1994, and 1995, respectively.
In deciding whether INI, Inc., intended to enforce repayment
of the funds advanced petitioner, we need not decide whether INI,
Inc., has gone out of business. It is clear from the evidence
that INI's purpose in remaining in existence is to wind up its
affairs and retain petitioner's loans on its books of account.
Upon consideration of all the facts and circumstances of this
case, we do not find the fact that INI, Inc., retained
petitioner's loans on its books of account persuasive evidence
that it intended to enforce repayment of the amounts it advanced
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