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checks and promissory notes were attached to each of these claims
as substantiation of the amounts owed.
Zephyr’s bankruptcy was finalized in late 1989. Sometime
between the time that the bankruptcy was finalized and the end of
March 1990, a third party purchased Zephyr’s assets, and the
proceeds of that sale were distributed to specific secured and
unsecured creditors of Zephyr. Neither Printon Kane,
PK Ventures, TBPC, nor TPTC received any of those proceeds.
As of December 31, 1990, the general ledger account used by
PK Ventures to account for certain transfers that it had made to
Zephyr had a net or remaining balance of $64,888.
A. As Described in the Business’s Financial Statements
and Income Tax Returns
1. 1987
No direct references were made and no explanations were
provided in Zephyr’s Form 1120S, U.S. Income Tax Return for an
S Corporation, for 1987 as to the amounts that Zephyr received
from Printon Kane, PK Ventures, TBPC, or TPTC during that year.
On the Schedule L, Balance Sheets, attached to that return,
Zephyr reported $6,961,306 of “Mortgages, notes, bonds payable in
less than 1 year” and $902,669 of “Mortgages, notes, bonds
payable in 1 year or more” as of the end of 1987. There were no
amounts separately identified as interest payments made and/or
imputed by Zephyr to PK Ventures, TBPC, or TPTC on Zephyr’s
Form 1120S for 1987.
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