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classified and reported as separate items in the
balance sheet. [Weygandt et al., Accounting Principles
324 (3d ed. 1993); emphasis added.]
See also Gehl Co. v. Commissioner, 795 F.2d 1324, 1330 (7th Cir.
1986) (“The term accounts receivable normally refers to an amount
that is due in return for goods or services supplied.” (Emphasis
added.)), affg. in part and setting aside in part on another
ground T.C. Memo. 1984-667. The record does not show whether
Sack intended the term “accounts receivable” in the acquisition
agreement to encompass all accounts which are broadly classified
as receivables or to be limited to its more common application of
a trade receivable.
Petitioner’s testimony that York acquired all of Mid-
Nebraska’s assets was premised solely on his own understanding of
the transaction. However, he had absolutely no control over what
assets York wanted and acquired. There is no evidence that
either Sack or his son specifically identified which of Mid-
Nebraska’s assets York wanted to acquire when they drafted the
letter of intent or the acquisition agreement. Petitioner’s
ignorance of financial and accounting concepts renders his
testimony alone insufficient to establish that York procured the
loans to shareholder accounts when it acquired Mid-Nebraska’s
business, and the documents on which petitioners rely are
inconclusive.
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