United States District Court, N.D. California

“ Thus, under the above assumptions, the balance in the Island Bank account never would have gone below zero.
49. The following on the balances of Finch Partnership's account at Barclay's after transactions affecting that account. Again, assume an initial balance of zero.
TABULAR OR GRAPHIC MATERIAL SET AT THIS POINT IS NOT DISPLAYABLE
Again, the balance in this account never would have gone below zero under the above assumption. 50. Nevada Energy and Heating Partnership is an entity sometimes used in the tax planning of the Margolis office. Ex. D-9. Cf. supra FF 17. ”

“ Ref IN 31023 B/O Barclay's Kol & co [sic] Amsterdam" to the account of Werner Erhard, the advices of incoming transfer and authorization letters are in the same order as the credit advices and advices of charge. Ex. D-9. In addition, the Margolis office often arranged these transfers with the office of van Walsum, the managing director of Island Bank. T. 376-80, 394-95. Such consultation would be necessary in order to ensure that the bank official conducting the telephonic transfers in Tortola also was prepared to process the telephonic transfers in the prearranged order. ”

“ T. 318; Ex. D-9.↑ Plaintiff could not recall the specific use of loan proceeds, usually stating that she used the proceeds for personal expenses or financial investments, T. 113, 170, even though the check register of her Barclay's account often indicated a specific use of the funds, Ex. P-D, T. 115-16, 171. Plaintiff generally claimed ignorance of all her financial transactions, see FF 31, T. 154, 157, including one of $40,000.00, T. 155. ”

“ Third, the alleged loan was unsecured and was interest-free. T. 503. Finally, the testimony of Margolis was not credible. Margolis has an interest in this case because it is his tax planning that is at issue, and, indeed, he is financing the litigation for plaintiff. T. 516-17. More importantly, his demeanor while testifying, especially his claimed sudden recollection on the stand, T. 503-04, was unconvincing.
B. Upon All the Evidence. 9. First, the indebtedness upon which the $6,000.00 payment was made was not genuine. See conclusion of law 7. ”

“ United States [60-2 USTC P 9785] , 364 U. S. 361 (1960) . Documents and bookkeeping entries are not dispositive evidence that a transaction has substance. Commissioner v. Goldwyn [49-1 USTC P 9321] , 175 F. 2d 641, 644 (9th Cir. 1949) ”

“ No evidence of payment was offered other than those referred to in FF 21, 24, 33 and 37. B. Government's Case. 40. It was the practice of the Margolis office to arrange numerous telephonic transfers between Barclay's and Barclay's Bank International, Tortola, British Virgin Islands ("Tortola") , to take place on a single day. T. 345-46. Such a series of telephonic transfers took place on November 30, 1977. Ex. ”