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The record also includes a promissory note that Ballard
purportedly executed on January 20, 1987, which provided (1)
Ballard agreed to pay to TMT, on demand, the principal sum of
$100,000, and (2) the note would not bear interest but TMT was
entitled to receive 90 percent of the “dividends” paid to Ballard
by Fairfield. At the same time, Ballard’s wife, Mary Ballard,
acting as TMT’s president, and Ballard signed an agreement which
stated that (1) Ballard was executing a note to TMT and was
pledging 1,000 shares of Fairfield common stock as security for
the note, and (2) TMT, as part of the transaction, agreed to
advance in the future “any deficits incurred by * * * Ballard in
the operations of Fairfield * * * and is to receive 90% of the
dividends paid by Fairfield”. Mary Ballard, acting in her
individual capacity, and Ballard also signed an assignment which
stated that “for the purpose of securing the payment of all
indebtedness now owing, or which may at any time hereafter be
owing” by Ballard to TMT, the Ballards assigned to TMT 1,000
shares of Fairfield common stock.
In 1987, TMT apparently paid an additional $20,344 to
Fairfield, and this amount was treated as an additional loan to
Ballard.
The Ballards reported Fairfield items of income and loss on
their 1987, 1988, and 1989 tax returns.
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