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During 1999, Caspian paid $40,000 to the Internal Revenue
Service and $8,000 to the California Franchise Tax Board to
satisfy petitioner’s tax liabilities. Caspian also made
disbursements of $200,000 and $32,623 directly to petitioner
during 1999. These payments and disbursements will hereinafter
be referred to as the 1999 payments and disbursements.
During 2000, petitioner charged $26,338 to a company credit
card for personal items (2000 personal charges). Petitioner
reimbursed Caspian $14,059 through payroll deductions in 2000.
OPINION
I. Burden of Proof
Petitioner does not assert that section 7491(a) shifts the
burden of proof to respondent. Petitioner also did not satisfy
the requirements of section 7491(a)(2). Therefore, petitioner
bears the burden of proof. Rule 142(a).
II. Loan Analysis
Petitioner contends that the 1999 payments and disbursements
and the 2000 personal charges were loans. Respondent determined
that the 1999 payments and disbursements and the 2000 personal
charges were constructive dividends to petitioner.
The Court of Appeals for the Ninth Circuit defines a loan as
“‘an agreement, either express or implied, whereby one person
advances money to the other and the other agrees to repay it upon
such terms as to time and rate of interest, or without interest,
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Last modified: May 25, 2011