- 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 familyPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011