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document and then assigned the WMG note and other collateral to
Natwest.
In 1989, petitioner borrowed $2.65 million and $350,000,
separately, under the Natwest loan agreement, which amounts he in
turn lent to WMG pursuant to his loan agreement with that
company. Petitioner advanced additional funds to WMG in 1989,
which petitioner represents totaled $696,456.21. Petitioner made
additional advances to WMG of $643,646.85, $236,450, $29,610.49
in 1990, 1991, and 1992, respectively. In 1990 and 1991, Century
Park Pictures Corp. (CPPC)11 made loans to WMG. In 1991,
petitioner made payments of $223,164.44 to CPPC on the notes
issued by WMG, and he treated those payments as additional
advances to WMG.
WMG made payments of $124,050, $25,000, $262,000, and $2,000
to petitioner in 1989, 1990, 1991, and 1992, respectively. Those
amounts were applied to reduce the principal balance then owing
from WMG to petitioner. WMG accrued interest expense on its note
to petitioner in 1989 and 1990. Petitioner reported the receipt
of $900 interest income from WMG on Schedule B, Interest and
Ordinary Dividends, of his 1989 Federal income tax return.
Petitioner did not report any interest income from WMG in 1990,
1991, or 1992.
11IBC held a minority interest in Century Park Pictures
Corp. (CPPC). Petitioner also owned stock in CPPC.
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