Nariman Teymourian - Page 17

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          shareholders and closely held corporations, formalities are often           
          not followed.  A lack of formality does not preclude treatment of           
          disbursements as loans.  See Miele v. Commissioner, supra at 568-           
          569.  The absence of a note does not outweigh the behavior of               
          petitioner or Caspian in treating the disbursements as loans.  In           
          addition, the fact that petitioner paid back a substantial                  
          portion of the disbursements indicates that the lack of                     
          collateral and the lack of a set repayment schedule did not                 
          diminish his intent to repay.                                               
               Petitioner and Mr. Morrison understood the amounts disbursed           
          to be loans.  Petitioner acted in a manner consistent with the              
          existence of a loan, as demonstrated by his payment of interest             
          and substantial repayment of a portion of the amounts disbursed.            
          Due to his salary and his history of repayment, petitioner had a            
          reasonable prospect of repaying the disbursements in full.  Based           
          on the evidence in the record, we hold that the amounts disbursed           
          to petitioner during the years in issue were loans.6                        
          C.  Petitioner is Not Liable for Section 6662 Accuracy-Related              
               Respondent assessed section 6662(a) penalties of $64,703.40            
          and $41,502.20 against petitioner for 1999 and 2000,                        

               6  This finding does not include the following amounts                 
          conceded by petitioner:  (1) Capital gain of $137,880 received in           
          1999, and (2) additional income of $4,415.57 and $10,000 received           
          in 1999 and 2000, respectively.                                             

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