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With regard to petitioners’ funds that were used to pay
expenses of Telim, no promissory notes were issued by Telim to
petitioners, and no repayments were made by Telim to petitioners.
As of the end of 1987, as a result of the defective
telephones and lack of profits, Telim’s business operations were
effectively terminated. On January 1, 1988, a Telim corporate
resolution authorized Amos to sell Telim's capital equipment in
Taiwan and to pay off Telim's debts in Taiwan. Petitioners were
authorized to sell Telim's assets located in the United States in
order to pay off Telim's remaining debts. The Telim shares of
stock owned by Morales and Amos were transferred to petitioners
in exchange for releases of Morales and Amos from any debt
obligations of Telim.
On January 1, 1988, Morales and Amos resigned as officers of
Telim.
On October 11, 1991, petitioners sold for a gain of $26,713
their personal residence in Novato, California, and petitioners
moved to Austin, Texas. Petitioner's employer paid $18,419 of
petitioners' moving expenses to Texas. Petitioners built a new
residence in Austin that was completed in March of 1994, at which
time petitioners moved into the new residence.
Telim’s 1987 corporate Federal income tax return reflected a
total of $16,623 as loans to shareholders.
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