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Background
Pursuant to the Court’s Order issued under Rule 37(c)1 on
January 23, 2003, all of the affirmative allegations in paragraph
6 of the answer, and consequently all of the facts on which
respondent relies in respondent’s motion, are deemed admitted.
Petitioner had a mailing address in Glenview, Illinois, at
the time he filed the petition in this case.
During 1990 and 1991, petitioner operated and was the
president, corporate secretary, and sole shareholder of Duncan &
Associates, Inc. (Duncan & Associates), a subchapter C corpora-
tion. During those years, Duncan & Associates engaged in the
insurance brokerage business.
As of December 31, 1989, petitioner had an outstanding loan
balance of $86,562 with respect to amounts that Duncan & Associ-
ates had lent petitioner for which that company did not charge
petitioner any interest. (We shall refer to the interest that
Duncan & Associates did not charge petitioner on his outstanding
loan from that company as forgone interest.) During 1990 and
1991, petitioner did not pay Duncan & Associates any interest on
petitioner’s outstanding loan balance with that company.
During 1990, when petitioner was approximately 42 years old,
he withdrew $10,000 from Duncan & Associates’ Money Purchase
1All Rule references are to the Tax Court Rules of Practice
and Procedure. All section references are to the Internal
Revenue Code (Code) in effect for the years at issue.
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Last modified: May 25, 2011