Stephen P. and Jutta A. Maranto - Page 8

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          motion to quash to the date of entry of the court's order was 83            
          days.  Thus, even without taking into account the period during             
          which the petition to quash the original summons was pending, or            
          the period for an appeal, we find that the notice of deficiency             
          was issued to petitioners within the period of limitations.  See            
          sec. 7609(e)(1).                                                            
               The second issue for decision is whether petitioners had               
          $15,000 of unreported Schedule C income for 1991.  Petitioners              
          contend that the funds in question were loans from the Herkeios             
          Group.  Borrowed funds are excluded from a taxpayer's gross                 
          income, "because the taxpayer's obligation to repay the funds               
          offsets any increase in the taxpayer's assets".  United States v.           
          Centennial Sav. Bank FSB, 499 U.S. 573, 582 (1991).  The                    
          hallmarks of a loan are:  (1) Consensual recognition between the            
          borrower and the lender of the existence of the loan (i.e., the             
          obligation to repay); and (2) a bona fide intent on the part of             
          the borrower to repay the funds advanced.  Collins v.                       
          Commissioner, 3 F.3d 625, 631 (2d Cir. 1993), affg. T.C. Memo.              
          1992-478.  Whether a debtor-creditor relationship exists is a               
          question of fact.  Beaver v. Commissioner, 55 T.C. 85, 91 (1970);           
          Fisher v. Commissioner, 54 T.C. 905, 909 (1970).  Petitioners               
          bear the burden of proof.  Rule 142(a); Welch v. Helvering, 290             
          U.S. 111, 115 (1933).                                                       







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