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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.
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