COMMENT: PG was making money. Cost of goods sold is a deduction, whereas a loan is not, at least not until it becomes uncollectible. I can see the allure of another deduction on a profitable tax return. Still, to amend a return for this reason strikes me as aggressive.
- Povolny moved approximately $311 grand among his companies, and
- He deducted the whole thing using one description or another.
- A written note
- An interest rate
- A maturity date
- Repayment schedule
- Recourse if the debtor does not perform (think collateral)
· The $241 thousand loan did not have a written note, no maturity date and no required interest payments.
· Ditto for the $70 grand.