- 12 - corporation lent petitioner $50,000 during 1989. Accordingly, we find that petitioner has failed to prove that the $50,000 was not a loan. Respondent determined that petitioner realized income during 1994 from the cancellation of indebtedness. In support of that position, respondent relies on the running of the period of limitations for enforcement of the note and the elimination of the note from the Schedules L of the corporation and the three spinoff corporations. Petitioner did not submit any proof in support of her position that the Pattersons forgave $10,000 of the note each year for 5 years, resulting in the note’s being paid in full by the end of 1993. Although not controlling, the running of the period of limitations on the time within which the corporation could have commenced an action against petitioner to recover the debt supports respondent’s position. See Miller Trust v. Commissioner, 76 T.C. at 195. Additional support for respondent’s determination is found in the manner in which the corporation handled the note on its 1994 return. The corporation included the $50,000 note as an asset at the beginning of 1994 on Schedule L. However, neither the corporation nor any of the three spinoff corporations included the note on its tax return as an asset at yearend 1994.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
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