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the leases did not change. Under the comprehensive lease in
effect for the periods at issue here, Mr. and Mrs. Dobbe leased
“those certain warehouses and shed” and “the crop land” at 1066
South Pekin Road. None of the leases from 1988 through September
30, 1993, contained any reference whatsoever to Mr. and Mrs.
Dobbe’s residence, and their scope was not ambiguous. The leases
did not include the Dobbe residence.
Holland America’s Shareholder Loans
Holland America has been financed, in part, by shareholder
loans since its incorporation in 1988. Holland America’s
liability to its shareholders was reflected in annual corporate
minutes and evidenced by annual promissory notes.
Holland America deposited money each month into an accounts
payable liability account (accounts payable account), which was
used to account for both unpaid accrued rent under its lease and
interest accruing on the promissory notes. Mr. and Mrs. Dobbe
reported both the interest and the rent as income on their
Federal income tax returns. Throughout each year, Holland
America deducted funds from the accounts payable account as it
made payments on behalf of Mr. and Mrs. Dobbe for personal
expenses. At the end of each accounting year, the balance of the
accounts payable account was reconciled. If the accounts payable
account was positive (corporation owed money to Mr. and Mrs.
Dobbe), Holland America would pay the balance to Mr. and Mrs.
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Last modified: May 25, 2011