Stephanie Jane Hauge - Page 13

                                        -13-                                          
          our view, the fact that OMCC and petitioner jointly borrowed                
          $550,000 of the funds used to pay the settlement is compelling              
          evidence that OMCC and petitioner joined in paying that portion             
          of the settlement.                                                          
               OMCC was as much a target of the Government’s efforts to               
          collect the unpaid farm loans as petitioner.  The Government                
          requested that the District Court enter a judgment against OMCC             
          and petitioner, jointly and severally, for the full amount of the           
          unpaid farm loans, and OMCC was a party to the settlement                   
          agreement that ended the farm loan litigation.                              
               Considering the claims that the Government made against                
          petitioner and OMCC in the farm loan litigation (discussed in               
          detail below at par. C-2) and the bank loan records identifying             
          petitioner and OMCC as co-borrowers on the $550,000 loan, we                
          conclude that petitioner and OMCC each paid one-half of $550,000            
          of the $625,000 settlement payment.  We also conclude that OMCC             
          paid the remaining $75,000 of the $625,000 settlement payment               
          inasmuch as it borrowed that amount against its own line of                 
          credit.  Thus, we conclude that petitioner paid $275,000 of the             
          $625,000 settlement payment and that OMCC paid the remaining                
          $350,000.                                                                   
          C.   Whether OMCC and Petitioner May Deduct Their Shares of the             
               Settlement Payment                                                     
               We next consider how much (if any) of its $350,000 payment             
          OMCC may deduct under section 162 or must capitalize, and how               





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011