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section 6662(a) because of negligence or disregard of the rules
or regulations.
As a defense to respondent’s determination of omitted
income, petitioners seek to characterize the $32,500 check issued
to OTFP by Ms. Johnson as a loan. Petitioner and Ms. Johnson did
not execute a loan agreement with respect to the $32,500 payment.
Petitioner testified about the payment from Ms. Johnson. He
indicated that it “was a personal loan made from Ms. Jill Johnson
to myself” and because it “was sealed with a hug and a handshake
outside of her –- outside of our Summer League offices in West
L.A., and if that was good enough for her, that was good enough
for me.” According to petitioner, Ms. Johnson, a personal
friend, lent petitioner the money because he agreed to produce
the FSZ show. OTFP used the $32,500 payment to: (1) Produce the
FSZ show; (2) to pay expenses on other projects; and (3) for
general office expenses. Petitioner deposited the check into the
business bank account of OTFP.
Petitioner testified that he did not have the funds
available to produce the FSZ show and required funds from Ms.
Johnson because he was in bankruptcy at the time. Petitioner
produced a letter dated December 21, 1999, from Ms. Johnson which
indicated that she lent petitioner funds to assist in the
operations of OTFP.
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Last modified: May 25, 2011