- 39 -
City and Bishoy during the course of their ownership and does not
include an analysis of the amounts that these corporations paid
to the Gownis prior to 1999. Without knowing the amounts of the
outstanding shareholder loans due to the Gownis from Mina of
Forest City and Bishoy for 1999, it is impossible to determine
the amount of the distributions that the Gownis received from
these corporations during 1999 that could be characterized as
repayment of these loans.
Fifth, the Gownis have not established how much compensation
Mr. Gowni received for the services that he provided for Mina of
Forest City and Bishoy. Mr. Gowni testified that he worked 10
hours per day 5-6 days per week for his business entities
(including Mina of Forest City and Bishoy) during the years in
issue. It is unlikely that Mr. Gowni received no compensation
for those services. It is more likely than not that the
distributions were compensation rather than loan repayments.
We conclude that the Gownis did not intend to create a true
debtor-creditor relationship with Mina of Forest City and Bishoy.
The Gownis treated these entities as their own personal bank,
depositing and withdrawing funds at will. Accordingly, we
sustain respondent’s contention that the distributions that the
Gownis received from Mina of Forest City and Bishoy during 1999
did not constitute repayment of bona fide loans.
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011