Myer B. Barr and Estate of Diana L. Barr - Page 8

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          note, Stephen and Jeffrey lowered the interest rate to 10                   
               Jeffrey testified that from the time the note was executed             
          on September 13, 1990, until it was transferred to petitioner on            
          February 28, 1991, Stephen made timely monthly interest payments            
          on the note.  Jeffrey, however, did not report any interest                 
          income from Stephen on his 1990 and 1991 Federal income tax                 
               After the note was transferred to petitioner, Jeffrey                  
          continued to collect interest payments.  Jeffrey testified that             
          interest was paid on the note until approximately September 1992.           
          At that time, Stephen informed Jeffrey that he was struggling and           
          having trouble collecting his accounts receivable, and that he              
          would no longer be able to make interest payments on the note.              
               On his 1992 Federal income tax return, petitioner reported             
          interest from Stephen in the amount of $2,100, which is                     
          substantially less than the note provided.  Petitioner allowed              
          Jeffrey to keep any interest payments in excess of the $2,100.              
          On two occasions Jeffrey, his wife, and their children visited              
          petitioner in Florida.  During these trips, Jeffrey and his                 
          family incurred expenses for airfare, hotel accommodations,                 
          renting a car, and other travel related expenses.  Petitioner               
          told Jeffrey to keep the interest payments as reimbursement for             
          whatever travel expenses he incurred.                                       

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