Greg R. Vinikoor and Melissa D. Vinikoor - Page 13

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          needed money from a concerned grandfather who wanted to help out.           
               7.  Ability to Repay                                                   
               The record establishes that petitioners' annual income was             
          not sufficient to allow them to maintain their lifestyle and                
          repay their obligations to Drachman.  Therefore, petitioners have           
          not shown that there was a reasonable expectation that they could           
          have repaid the loans from their annual income.                             
               8.  Records of the Loans                                               
               The only records relating to the purported loans are the               
          notes signed by petitioner and Drachman, and the Christmas                  
          letters forgiving the shares.                                               
               9.  Reporting the Loans for Federal Tax Purposes                       
               Petitioner testified that he thought he recognized income              
          from discharge of indebtedness in the years when shares of the              
          loans were forgiven, but did not introduce income tax returns               
          from those years indicating that he had reported the forgiven               
          amounts.                                                                    
               Although not dispositive, we examine the purpose of the                
          transfers of stock.  Petitioners and respondent dispute the                 
          underlying cause of the transactions.  Petitioners assert that              
          shares of Price Co. stock were lent to them in October and                  
          December 1987 as collateral for threatened margin calls on their            
          account.  These margin calls, petitioners claim, were the result            
          of the stock market crash of October 1987 and a corresponding               





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