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an $800,000 reduction in the amount that it owed to TPC and an
$800,000 increase in the amount that it owed to Rose.
The Roses deducted losses from SLPC totaling $322,973 on
their joint income tax return for 1995.
As of February 5, 2004, the outstanding principal balance of
the transactions between SLPC and the Roses was no less than the
outstanding principal balance of those transactions as of 1995.
Furthermore, between 1995 and February 5, 2004, the outstanding
principal balance of the transactions between SLPC and the Roses
remained substantially unchanged.
A. As Described in SLPC and the Roses’ Income Tax Returns
On the Schedule L attached to SLPC’s Form 1120S for
1994, SLPC’s “Other current liabilities” were reported to be
$1,732,262 as of the beginning of that year and $2,727,575 as of
the end of that year. Of these amounts, SLPC reported that
$1,730,997 and $2,711,734, respectively, were “DUE TO AFFILIATE”.
Also on this Schedule L, SLPC’s “Loans from shareholders” were
reported to equal $350,000 as of the end of 1994. There were no
amounts separately identified as interest payments made and/or
imputed by SLPC to the Roses on its Form 1120S for 1994.
There were no amounts separately identified as interest
payments received and/or imputed by the Roses from SLPC on their
joint income tax return for 1994.
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