- 20 -
(b) STL Checks to WPA
In 1995, 1996, and 1997, STL issued checks to WPA in the
total amounts of $65,833,23 $128,000, and $50,345, respectively
which were deposited into the WPA account. The pattern of STL’s
periodic payments (weekly), the amounts of the payments, the
frequent statements Mr. Sowards provided to STL for “amounts
due,” and the fact that Mr. Sowards rendered services to STL and
its customers throughout the period of time that STL was making
payments to WPA, establish that Mr. Sowards received remuneration
for services he rendered to STL, its customers, and/or Mr.
Strong. That remuneration was in the form of the STL checks to
WPA which were deposited into the WPA account.
Mr. Sowards contends that all the checks STL wrote to WPA
were nontaxable loans. In support, Mr. Sowards introduced a one-
page document. Because this document is the fulcrum of Mr.
Sowards’s position, we quote it in its entirety:
This memorializes our oral agreement of January 3,
1995:
This agreement between us is never to [sic] revealed to
Jan Strong or Marilyn Sowards.
Robert Strong Trustee, acting with full authorized
authority on behalf of System Two, will loan Ray
Sowards, from System Two, beginning January 1, 1995 to
December 31, 2001, the sum to which we mutually agreed,
22(...continued)
gross receipts of $23,575. The difference then is $7,275.37.
23See supra note 18.
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