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affd. 85 Fed. Appx. 875 (3d Cir. 2003).
Mr. Cotler argues that although the firm wrote the checks
that paid for the Standard policy, he reimbursed the firm for the
amount of his premiums by deducting these amounts from his
shareholder loan account. In Bouquett v. Commissioner, T.C.
Memo. 1994-212, a corporation paid the premiums on the taxpayer’s
disability policy. In Bouquett, we held that the corporation was
nothing more than a conduit that paid the premiums nominally and
then collected the premium payments from the employees. Mr.
Cotler reimbursed the firm by subtracting the amounts of the
insurance premiums from his loan to the firm. Mr. Cotler’s firm
was nothing more than a conduit.
Ms. Marlane and Mr. Gladstone credibly testified that Mr.
Cotler had a longstanding and consistent practice of not paying
personal expenses with corporate funds. From the inception of
the Standard policy until premiums were waived, Mr. Cotler
treated the premiums as personal items, he paid his share of the
premiums during the years in issue through his loan account, and
the firm never deducted them on its Forms 1120.
Respondent argues that Mr. Cotler failed to reimburse his
firm for the premiums on the Standard policy. Respondent further
argues that the bookkeeping entries and the shareholder loan
receivable document do not demonstrate that Mr. Cotler actually
paid the premiums on the Standard policy. We disagree. Since
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