- 19 - 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.Page: 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