- 4 - president of BCBI, and the corporate resolutions were signed by petitioner as the sole member of BCBI's board of directors. The funds advanced by petitioner on both occasions were used for BCBI's current operating expenses. Except for the amounts and due dates, the terms and conditions of the notes are identical. Each refers to petitioner as the lender and BCBI as the borrower. The advances are characterized as loans from petitioner to BCBI with principal and interest (prime rate plus 2 percent computed quarterly) due in 1 year from the date of the note. Each note was renewable at the option of petitioner (as the lender). If BCBI defaulted on any term of the notes, became insolvent, filed a bankruptcy petition, or had a receiver appointed, the notes would become immediately due and payable in full. Neither note was fully paid as of its due date. The notes were not renewed, and the repayment periods were not extended. Petitioners reported interest income from BCBI on their joint Federal income tax returns as follows: Year Amount 1987 -0- 1988 -0- 1989 $39,102 1990 35,236 1991 20,599 Although less than clear from the record, it appears that from time to time prior to December 20, 1991, petitioner, orPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011