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Hammontree’s 50-percent ownership in Glenwood. Around that time,
petitioner’s basis in his Glenwood shares was $13,914.
On April 25, 1989, petitioner and Hammontree personally
guaranteed a loan in Glenwood’s name for $43,080 which was
secured by Glenwood’s operating assets. On April 26, 1989, in
accord with the original agreement of petitioner and Hammontree,
petitioner received a $29,788.59 payment from Glenwood. It was
their understanding that the $29,788.59 paid to petitioner was
Hammontree’s payment for one-half of the shares in Glenwood.
In a July 1992 purchase of petitioner’s remaining 50-percent
interest in Glenwood, Hammontree used corporate funds to finance
a portion of the transaction, showing a pattern in the way
petitioner and Hammontree orchestrated their affairs.
Considering the record as a whole, the $29,788.59 payment was a
payment from Hammontree for petitioner’s interest in the
business.4 Accordingly, we hold that the $29,788.59 payment was
not a corporate distribution to petitioner and that it was from
Hammontree.5
4 We are not required here to consider what effect
Hammontree’s withdrawal of $29,788.59 from Glenwood had on
Hammontree’s tax situation.
5 The extent to which our holding has any effect on
petitioner’s basis in Glenwood’s stock should be determined by
the parties under Rule 155.
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