- 30 -
This Court found the following facts: (1) “the ultimate
source and resting place for the $150,000 was Aldergrove”,
(2) the interest payments made by petitioners on February 26,
1987, and December 22, 1988, on the purported loan were
immediately transferred to Aldergrove, and (3) those payments
lacked economic substance because petitioner controlled
Aldergrove partnership matters and benefited from and controlled
the funds held by Aldergrove when the payments were made. We
stated:
We find that these various payments by petitioners
lacked economic substance. Petitioner testified that
the “mortgage” on his home was part of his asset
protection plan, and that by reducing his equity in his
home, he hoped to replace an “unknown liability that
could take the house away” with a “known liability that
you know you can repay,” i.e., the “loan” note.
Petitioner neglected to complete the picture in his
testimony however. For any real protection to occur,
petitioners would have also had to transfer the equity,
or loan amount to a place unreachable by “unknown”
creditors. From our analysis of the above
transactions, it appears that petitioners did just that
by transferring equity through Hansa Finance (or Ihatsu
Fudosan) to Aldergrove. This fits squarely into
petitioner's own testimony, since petitioner believed
that assets held in Aldergrove were protected. Of
course, petitioner had to have access and control over
Aldergrove's assets to make the plan truly beneficial
to him. He did, through his security interest in GML's
Aldergrove capital and profits, and through his SAR's
in GML. Thus, the purported loan amount was never
outside of petitioner's dominion and control and the
principal and interest payments made by petitioners
were nothing more than transfers from one beneficially
owned account to another. * * * [Monahan I; fn. ref.
omitted.]
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011