- 24 -
the money to John Monahan, whose own $9,000 capital
contribution to Aldergrove Investments played no
significant part in the transaction. Although
Respondent argues that Petitioner made the loans to
Group M and Chestnut Grove Investments, * * * the
partnership agreement reflects that Bell, and not John
Monahan, is the ultimate source of the funds used by
Group M and Chestnut Grove Investments to purchase the
16-acre Yakima parcel. Accordingly, Bell, and not
petitioners, is taxable on the interest paid by those
corporations regarding the loans.
We agree with petitioners that the Aldergrove issue and
petitioners' concession do not necessarily undermine petitioners'
assertion that the Yakima interest payments represent interest
paid to Mr. Bell because respondent has not established that
Aldergrove was anything other than what it purported to be when
funds were transferred to Hansa Finance. In other words, the
Aldergrove issue relates to petitioner's relationship with
Aldergrove on December 26, 1991, and may provide reasonable
inferences regarding petitioner's relationship with Aldergrove
during the entirety of 1991, but does not provide a sufficient
basis to undermine petitioners' contention that Mr. Bell was the
“ultimate source” of the funds loaned to Chestnut Grove and
Group M in 1987 and 1988.
e. Other Factual Issues Established in Monahan I
(1) Introduction
In respondent's brief, respondent asserts that this Court
should give effect to the unambiguous findings of
Monahan I and find that Petitioner is collaterally
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011