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Petitioner caused The Activewear Company, Inc. (Activewear),
a corporation of which he was a 50-percent shareholder, to lend
money to an unrelated party, Randy Jackson (Jackson), to use in
Jackson's businesses. Jackson did not fully repay the loans.
The issues for decision are:
1. Whether the amounts Activewear lent, less the amounts
Jackson repaid (a net of $318,000 for 1990 and $126,094 for
1991), were taxable to petitioner as constructive dividends from
Activewear. We hold that they were not.
2. Whether the value of property Jackson provided to
petitioner as security was income to petitioner in 1990 and 1991.
We hold that it was not.
3. Whether petitioner is liable for an addition to tax
under section 6651(a)(1) for late filing of his 1990 Federal
income tax return. We hold that he is.
Section references are to the Internal Revenue Code in
effect in the years in issue. Rule references are to the Tax
Court Rules of Practice and Procedure.
FINDINGS OF FACT
Some of the facts are stipulated and are so found.
A. Petitioner
Petitioner lived in Athens, Georgia, when he filed the
petition in this case.
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