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between actual repayment and the giving of a promissory note,
holding the latter insufficient to prevent wrongfully taken funds
from being taxed to the taker. Quinn v. Commissioner, 524 F.2d
617 (7th Cir. 1975), affg. 62 T.C. 223 (1974). Nonetheless, we
are satisfied that petitioner’s transfer of funds to the ANB
accounts and the subjection of the Sam Han account to the TRO
constitute repayments for purposes of the exception. These
amounts were “returned to the corporation or its creditors”
because petitioner lost control of the funds to a third-party
custodian who held them as security for a creditor’s claim
against his corporations.
We now apply our findings concerning petitioner’s exercise
of dominion and control by mid-1988 over, and his return before
yearend of a portion of, the funds at issue in this case.
The $986,856 at issue is best understood as comprising (1)
the $536,856 “net” proceeds petitioner retained after the
multiple transfers in early 1988 between the corporate Albank No.
1 account and his personal FCIS account, and (2) the $450,000 in
cash transferred from corporate accounts to the Sam Han account.
The $536,856 “net” proceeds are traceable to the Kodak stock
and the Pan Am stock, purchased with $448,878 and $116,600 of
corporate funds, respectively.45
45 The total amount used to purchase these two blocks of
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