Investment Research Associates - Page 513




                                       - 557 -                                         
               IRA's writeoff of these notes receivable from Ballard and               
          Lisle was based on the contention that Ballard and Lisle did not             
          acknowledge that any debt existed.                                           
               During 1987 Ballard and Lisle had the resources to pay in               
          full the subject notes held by IRA.                                          
               IRA failed to establish that the notes of Ballard and Lisle             
          were in fact debts of Ballard and Lisle.  If, however, the notes             
          represented indebtedness, IRA failed to establish that the notes             
          of Ballard and Lisle, in the amounts of $84,889 and $12,185,                 
          respectively, became worthless in 1987.                                      
               H. Abernathy (Abernathy) was a preferred shareholder of IFI.            
          During 1974 and 1975, IFI lent Abernathy amounts totaling                    
          $105,000.  The loans were evidenced by three demand notes, signed            
          by Abernathy, that recited an interest rate of 10 percent.  In               
          1977, the loans were partially repaid by crediting Abernathy's               
          preferred stock dividends from IFI against the balance of the                
          loans.  As of December 1987, IFI's books reflected a balance due             
          on the loans of $67,098.04.  In December 1987, IFI transferred               
          this loan to IRA as part of its consideration for the                        
          cancellation of IFI's debt to IRA.  IRA reduced the basis of this            
          loan to $28,862.29 and wrote off that amount as a bad debt.                  
               IRA failed to establish that the note receivable from                   
          Abernathy had any value prior to 1987 and failed to establish                
          that the note became worthless during 1987.                                  






Page:  Previous  547  548  549  550  551  552  553  554  555  556  557  558  559  560  561  562  563  564  565  566  Next

Last modified: May 25, 2011