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from petitioner’s salary was a payment for the interest that
accrued in 2000 on the 1999 payments and disbursements. The
partner testified that in 2000 interest accrued at the rate of
6.2 percent. We find that this factor weighs in favor of
petitioner.
Repayments to the lender from the borrower are evidence of a
loan. Petitioner partially repaid his debt in 1999 by
transferring $53,869 to Caspian. Petitioner credibly testified
that he repaid the balance of the 1999 payments and disbursements
and the 2000 personal charges. We find that this factor weighs
in favor of petitioner.
A loan may exist if the borrower had a reasonable prospect
of repaying the loan and if the lender had sufficient funds to
advance the loan. Petitioner’s 1999 payments and disbursements
totaled $280,623. Petitioner’s 2000 personal charges totaled
$26,338.
Petitioner reported adjusted gross income of $132,351 and
$159,973 in 1999 and 2000, respectively. We find that petitioner
had a reasonable prospect of repaying the advanced amounts.
The corporate income tax returns for Caspian listed taxable
income of $1,257,491 and $360,116 for 1999 and 2000,
respectively, and total income of $4,839,233 and $11,414,363 for
1999 and 2000, respectively. We conclude that Caspian had
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