- 33 -
No direct references were made and no explanations were
provided in PK Ventures, TBPC, or TPTC’s financial statements for
the year ended December 31, 1989, as to the amounts that
PK Ventures, TBPC, and TPTC transferred to Zephyr during that
year. Furthermore, no mention of Zephyr’s bankruptcy was made in
PK Ventures, TBPC, or TPTC’s financial statements for the year
ended December 31, 1989.
PKV&S claimed a $953,652 bad debt deduction on its
consolidated income tax return for 1989 for cash transfers that
PK Ventures, TBPC, and TPTC had made to Zephyr. PKV&S did not
attach to this return an explanation for claiming this bad debt
deduction. On the Schedule L attached to PKV&S’s consolidated
income tax return for 1989, PK Ventures and its subsidiaries
reported a total of $90,000 due from Zephyr under “Other assets”
as of the end of that year. This amount was described as “DUE
FROM UNCONSOLIDATED SUBSIDIARIES”. There were no amounts
separately identified as interest payments received and/or
imputed by PK Ventures, TBPC, or TPTC from Zephyr on PKV&S’s
consolidated income tax return for 1989.
4. 1990
On its Form 1120S for 1990, Zephyr represented that “No
income or expense items where [sic] reported on the tax return
due to the fact that the corporation was not solvent after the
completion of the bankruptcy.”
Page: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 NextLast modified: May 25, 2011