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petitioner in the amount of $2,979,5681 and interest due to
petitioner as of that date of approximately $227,9902.
Between December of 1995 and February of 1996, settlement
agreements were entered into between Blackland, Garland Farms,
and a number of the tenant farmers regarding repayment of the
loans that the tenant farmers owed to Blackland. Under the terms
of the above settlement agreements, crop production costs of
certain farmers were to be paid by Blackland, and in return the
farmers promised to transfer any crop proceeds, crop insurance
payments, and Government payments received first to Garland Farms
in payment of rent on the farm properties and then to Blackland
in repayment of the loans.
In February of 1996, a number of the tenant farmers who had
past due loans owed to Blackland and who had not yet entered into
settlement agreements with Garland Farms and Blackland filed for
bankruptcy.
For the first time, on Blackland’s March 31, 1996, balance
sheet (and thereafter on its balance sheets for April and May
1996) there is reflected a “Note Receivable” from petitioner,
1 $3,545,020 less $565,452 ($724,480 transferred by Blackland
to petitioner less $159,028 of purported interest) equals
$2,979,568.
2 A “worksheet” of petitioner’s that was stipulated to by the
parties reflects unpaid accrued interest for 1993 through 1995
owed to petitioner by Blackland in the amount of $227,990, or $20
less than the $228,010 interest claimed by petitioner as part of
the bad debt deduction in issue.
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