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and the funds transferred by NCPL to petitioner to operate the
Rivercliff property’s farm of $36,263, $13,454, and $42,533 in
1998, 2001, and 2002, respectively.
B. The Rivercliff Property Purchase Loan
With respect to the $519,033 NCPL advanced to petitioner for
the purchase of the Rivercliff property in 1998, the record
discloses that: (1) No promissory note or other instrument was
executed; (2) no collateral was pledged to secure repayment; (3)
there was no fixed schedule for repayment; (4) as determined
above, it was not reasonable to expect at the time the funds were
advanced petitioner could repay them; (5) no interest was charged
or paid; (6) and petitioner did not intend at the time the funds
were advanced to make any payments.
At trial petitioner testified that because of his long and
close relationship with Mr. Seki, formalities were not required
and the form of repayment was left open until the Rivercliff
property was completely developed. However, this does not
demonstrate that petitioner and NCPL conducted themselves in a
manner indicating the $519,033 advance was a loan.
Petitioner has failed to meet his burden of proving that the
$519,033 advanced to him for the purchase of the Rivercliff
property constituted a bona fide loan. On this record, the Court
finds that petitioner failed to report the $519,033 as income in
1998.
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