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business assets, liabilities, and expenses. There is a unique
code attributable to “Loans payable P. Wayne Wright” under
HJ Builders’ accounting system. No code was used to classify the
checks to Mr. Wright totaling $72,000. HJ Builders did not
deduct any of the additional disbursements to Mr. Wright on its
corporate income tax return.
HJ Builders recorded a zero balance under the item “Loans
from shareholders” on Schedule L, Balance Sheet per Books, of its
Form 1120, U.S. Corporation Income Tax Return, for 2002, which
Mr. Wright signed as president of HJ Builders under penalties of
perjury, affirming that he had examined the return and its
accompanying schedules and statements and that they were true,
correct, and complete to the best of his knowledge.
There are purported loans from Mr. Wright to HJ Builders
recorded in the corporation’s handwritten ledger entitled “Wayne
Cash Loans to HJB”, none of which are corroborated by a formal
promissory note with principal and interest rate corresponding to
the amounts recorded in the ledger. The corporate records
contain no repayment schedules, notations of regular payments, or
interest calculations with respect to any loans from Mr. Wright
to HJ Builders.
A Line of Credit Promissory Note (first note) dated
September 1, 1995, bearing stated annual interest at 5 percent
and payable on demand, was signed by Mr. Wright. The first note
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Last modified: May 25, 2011