- 24 - disclosed.”27 At trial, Mr. Sowards failed to state the terms and conditions of the alleged trust he was to create. The books and records of STL were not presented to the Court to assist in determining how STL characterized these payments.28 There was no collateral for these purported loans. Mr. Sowards indicated that he had no present means of paying back the amounts purportedly borrowed. The sole testimony of Mr. Sowards is not sufficient to establish the existence of an actual indebtedness. On this record, we are convinced that the funds transferred from STL/Mr. Strong to petitioners/WPA were not loan proceeds. Indeed, the evidence clearly establishes that the payments from STL to WPA were taxable income to Mr. Sowards. (c) Other Deposits into WPA’s Bank Account In 1996 and 1997, funds were deposited into the WPA bank account in addition to STL moneys. In 1996, an additional $21,773.86 was deposited into the WPA bank account.29 Examples of the additional items are: (1) A check from Alan D. Telebaum 27Accrued interest was not due until the principal was due. 28Clearly, such information would be helpful since the intent of the parties is “perhaps the ultimate question.” Dixie Dairies Corp. v. Commissioner, 74 T.C. 476, 495 (1980). 29In fact, a total of $152,317.86 was deposited into the WPA bank account. Of that, $2,544 represents nontaxable deposit items since Mr. Sowards transferred those sums from a different account.Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Next
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