Stephen P. and Jutta A. Maranto - Page 11

                                       - 11 -                                         

               Petitioners have not established that the so-called "loans"            
          were bona fide loans as opposed to income.  Rather, the evidence            
          indicates that petitioners attempted to use the trust to funnel             
          the income earned from their window-washing business to                     
          themselves under the guise of loans.  We conclude that the funds            
          in issue constitute unreported income.  Accordingly, we sustain             
          respondent's determination of additional income in the amount of            
          $15,000.6                                                                   
               The third issue for decision is whether petitioners are                
          entitled to exclude from income $300 that they received from the            
          Herkeios Group in 1991 as reimbursement for educational expenses.           
          Petitioners purchased a home-study course on investments in real            
          estate trust deeds, and they now argue that the $300                        
          reimbursement received from the Herkeios Group is excludable from           
          income.  We disagree.                                                       
               Section 127(a)(1) provides that "Gross income of an employee           
          does not include amounts paid or expenses incurred by the                   
          employer for educational assistance to the employee if the                  
          assistance is furnished pursuant to a program which is described            
          in subsection (b)."  Subsection (b)(1), in turn, defines an                 
          "educational assistance program" as a "separate written plan of             

               6The record indicates that respondent understated her                  
          computation of income.  Par. 8 of the stipulation of facts                  
          incorrectly states that the Herkeios Group made an advance of               
          $1,000 to petitioners in May 1991.  The relevant exhibit lists              
          the amount of the advance at $1,100.                                        




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011