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Petitioner’s statements regarding the character of the
advances were inconsistent. During respondent’s examination,
petitioner told respondent’s agents he owned only a small
percentage of the Rivercliff property and NCPL’s transfers of
funds to SSI were for NCPL’s ownership interest in the property,
not his. Petitioner also testified that as of March 2004, he and
NCPL were still negotiating whether to characterize the advanced
funds as NCPL’s ownership interest in the Rivercliff property or
as a loan to petitioner. Despite all transfers of title to the
Rivercliff property, petitioner has continued to enjoy full use
and benefit of the Rivercliff property including residing in the
new residence.
This factor indicates the parties did not intend to establish
a debtor-creditor relationship at the time the funds were
advanced.
8. Conclusion
Petitioner failed to meet his burden of proving that the
$5,380,318 transferred to SSI for the development of the
Rivercliff property and the $92,250 NCPL transferred to petitioner
for the Rivercliff farm operating expenses constituted bona fide
loans. On this record, the Court finds that petitioner failed to
report as income the funds transferred by TPPL to SSI of $249,193
in 1998, the funds transferred by NCPL to SSI of $2,109,464,
$2,746,708, and $274,953 in 1999, 2000, and 2001, respectively,
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Last modified: March 27, 2008