-27-
Our agreement with petitioners that LeBloch’s transfers of
money to Michelsen and NT were loans flows from our findings of
fact that petitioners regularly advanced funds to each other
without formal documentation and without formal terms, that the
transfers in question were made with the expectation, belief, and
intent that they be repaid, that the transfers in question were
made incident to the transferee’s need for operating funds, and
that the transfers in question were repaid by the transferee
shortly after receipt.10 LeBloch lent $95,000 for use (and that
was used) in the business of the Nature’s Touch shops, and, of
that amount, $35,000 was repaid in 1997, $15,000 was repaid in
1998, $20,000 was repaid in 1999, and $25,000 was repaid after
1999. In addition, petitioners had an informal understanding
that either of them would advance funds to the other without
formal terms and that the one for whose benefit the funds were
advanced would repay them. In fact, as to LeBloch, it was not
uncommon for him regularly to pay a common expense in full and
then contemporaneously receive reimbursement from Michelsen for
her share of that expense. Nor was it uncommon for LeBloch
regularly to pay out of his personal funds expenses of a Nature’s
Touch shop and then seek and obtain reimbursement from the shops
10 Because respondent makes no assertion that LeBloch’s
transfers were contributions of equity rather than loans, we do
not consider that question. See Metrocorp, Inc. v. Commissioner,
116 T.C. 211, 217 (2001).
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