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of good sold being subtracted from gross receipts twice in 1996.
However, that year is not before the Court in this case.
Petitioners argue that the cash advances to Phillips and the
endorsed back checks should be viewed as two independent
liabilities stemming from separate and unrelated facts. Under
such treatment, the cash advances from petitioner to Phillips
would be viewed as personal loans, and the endorsed back checks
would be viewed first as compensatory payments to Phillips and
then as repayments to petitioner of the borrowed funds when the
check was endorsed back to petitioner. Thus, because the
endorsed back checks would be viewed as compensatory payments
when issued from T.J. Construction, all of the endorsed back
checks would be deductible business expenses of T.J.
Construction, and the taxability to petitioner of the endorsed
back checks would be dependent on how much cash was advanced as
loans to Phillips. Petitioners argue that the tax treatment
outlined above is required because it is undisputed that T.J.
Construction owed Phillips money, and thus the checks issued to
Phillips were payments of legitimate corporate obligations.
We are not persuaded by petitioners’ retroactive portrayal
of the transactions between Phillips and petitioners. It is not
a necessary conclusion that all of the checks made payable to
Phillips were payments of legitimate obligations of T.J.
Construction. There is no credible evidence in the record
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