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above, the loan was not recorded on Taxman’s books, and there is
no evidence that petitioner repaid any of the $2,086. Although
petitioner was not a shareholder of Taxman, he controlled the
management and day-to-day operations of Taxman. The shareholders
did not participate at all in the business. The record does not
reflect how, if at all, the loans affected petitioner’s salary
from Taxman. We conclude that Taxman’s payment of petitioner’s
credit card debt in 1991 for his furniture did not create a loan
between petitioner and Taxman. Instead, the $2,086 payment
should be treated as compensation to petitioner and included in
his 1991 income.
3. Unreported Income in 1992
As mentioned above, Taxman paid $1,904 toward petitioner’s
furniture purchase in 1992. Taxman also paid $15,000 toward
petitioner’s personal tax liability from an earlier year.
Petitioner claims the $15,000 was reflected in two promissory
notes he executed between Taxman and himself. No debt instrument
was created for the furniture payment. The record contains no
evidence that petitioner gave security for the loans or provided
for fixed payment dates. However, the loan schedule for Taxman
and WFIC that is in the record and Taxman’s 1992 corporate return
reflect that Taxman lent petitioner a total of $20,856 in 1992.
This amount is more than the two loans petitioner argues he
received from Taxman in 1992 and may include additional loans for
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