- 14 -
for the 1990 tax year, the source of that interest has not been
shown. In addition, $125 of interest income is wholly
disproportionate to the $107,036 that petitioner alleges he lent
to his father.
Although petitioner’s father owned assets other than the
auction, such as rental property and the land on which FAP’s
business was situated, petitioner did not require security to
guard against default. Further, petitioner did not protect his
position to collect from his father’s assets in the event of
competing creditors. Petitioner did not seek collection or
repayment from his father. Petitioner’s testimony was that he
did not ask his father for repayment because “he is my father”.
Petitioner contends that his father made two lump-sum
partial repayments and that those repayments are indicia of bona
fide debt. However, there was no contemporary repayment
schedule, and the only evidence of repayment was a handwritten
schedule submitted for trial purposes. The schedule submitted
for trial reflected that the first repayment of $19,505 was made
to the lending bank and the second repayment of $13,000 was made
to petitioners.
We review transactions between family members with
heightened scrutiny. See Caligiuri v. Commissioner, 549 F.2d
1155, 1157 (8th Cir. 1977), affg. T.C. Memo. 1975-319; Perry v.
Commissioner, 92 T.C. 470, 481 (1989), affd. without published
opinion 912 F.2d 1466 (5th Cir. 1990). Loans between family
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011