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In addition to the above transfers, various checks were
prepared and signed by Mr. Tedford. The word “Loan” was written
on the checks. Some of the checks were written directly to
Border while others were written to third parties to pay Border’s
business expenses. Petitioner claims that other demand notes had
been created for the transfers Mr. Tedford and petitioner made to
Border. Petitioner also claims that the business and accounting
records of Border were stored in various locations in El Paso,
Texas, and Las Cruces, New Mexico, and that it was very difficult
to locate and review these records as several of them had been
lost or destroyed.
Mr. Tedford met with Ms. Williams and Mr. Edge, and
instructed them concerning which advances from his personal
accounts constituted loans to Border. Ms. Williams summarized
these checks and provided a summary of the loans along with
copies of the checks to Mr. Edge. Mr. Tedford also instructed
the in-house accountant that these transactions were to be
reported as shareholder loans on the accounting books of Border.
Mr. Edge reported these transactions as loans on the accounting
records of Border and Forms 1120, U.S. Corporate Income Tax
Returns, of Border for 1994-96. Formal loan documents were not
executed for most of the transfers.
Mr. Tedford and petitioner prepared a personal financial
statement, dated July 31, 1994, to obtain a business loan from
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