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In 1987 and 1988, petitioner received additional funds from 2618
Inc, and he used those funds (with the exception of $17,281 that was
used by petitioner in 1988 for personal purposes) to make payments of
principal and interest to TexGuarantyBk on the $275,000 loan. The
following schedule reflects for 1987 and 1988 the funds petitioner
received from 2618 Inc to make payments on the $275,000 loan and the
principal and interest that petitioner paid to TexGuarantyBk on the
loan.
Funds Paid to
Funds Received TexGuarantyBk on $275,000 Loan
Year from 2618 Inc As Principal As Interest
1987 $ 90,900 $68,751 $22,149
1988 121,200 91,668 12,251
For 1988, on its corporate Federal income tax return, 2618 Inc
deducted as a business expense for legal fees the above $121,200 in
funds that it paid to petitioner relating to the $275,000 loan.
Funds Received From 2618 Inc as Legal and Management Fees
During 1987, petitioner received funds from 2618 Inc and from
the Club as legal and management fees in the following amounts:
Funds Received from 2618 Inc
Year As Legal Fees As Management Fees
1987 $108,713 $67,500
1988 52,881 90,000
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Last modified: May 25, 2011