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2015-02-02T00:00:00.000Z

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Wrong Harold Johnston?

Harold C. Johnston Jr.

HQ Phone: (808) 521-5011

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Council for Native Hawaiian Advancement

33 South King Street Suite 513

Honolulu, Hawaii 96813

United States

Company Description

Founded in 2001, CNHA is a statewide and national network of over 100 Native Hawaiian Organizations. We are a strong voice on public policy, operate a community loan fund, deliver capacity-building and leadership development services, and promote communit ... more

Find other employees at this company (23)

Background Information

Employment History

Director of Service and Operations

Sandwich Isles Communications , Inc.

Board President

Papakolea Community Development Corporation

Executive

Hawaiian Telephone

Director and Chief Executive Officer

Summit Communications Limited

Education

Kamehameha Schools

Bachelor of Science Degree

the United States Naval Academy at Annapolis , Maryland

MBA

San Jose State University

Web References (20 Total References)


Board of Directors

www.hawaiiancouncil.org [cached]

Representative(s): Harold Johnston; Puni Kekauoha (alternate)


Board of Directors

www.hawaiiancouncil.org [cached]

Representative(s): Harold Johnston; Puni Kekauoha (alternate)


Council for Native Hawaiian Advancement

www.hawaiiancouncil.org [cached]

Representative: Harold Johnston, President, and B. Puni Kekauoha, Executive Director

...
Mr. Johnston resides on Hawaiian Home Lands at Papakolea and is a graduate of the Kamehameha Schools and received a Bachelor of Science Degree from the United States Naval Academy at Annapolis, Maryland, and an MBA from San Jose State University. Mr. Johnston is the Director of Service & Operations for Sandwich Isles Communications and is responsible for overseeing the quality of network operations and services, and also for the planning and implementation of all new services, including emerging broadband technology applications. In addition to being a director of the CNHA board, Mr. Johnston serves as board president of the non-profit Papakolea Community Development Corporation, which supports educational and economic development opportunities for residents of Papakolea.


Council for Native Hawaiian Advancement

hawaiiancouncil.org [cached]

Representative: Harold Johnston, President, and B. Puni Kekauoha, Executive Director

...
Mr. Johnston resides on Hawaiian Home Lands at Papakolea and is a graduate of the Kamehameha Schools and received a Bachelor of Science Degree from the United States Naval Academy at Annapolis, Maryland, and an MBA from San Jose State University. Mr. Johnston is the Director of Service & Operations for Sandwich Isles Communications and is responsible for overseeing the quality of network operations and services, and also for the planning and implementation of all new services, including emerging broadband technology applications. In addition to being a director of the CNHA board, Mr. Johnston serves as board president of the non-profit Papakolea Community Development Corporation, which supports educational and economic development opportunities for residents of Papakolea.


Long Delay in Loan Enforcement Didn't Establish Taxpayer had Cancellation of Debt Income.

www.parkertaxpublishing.com [cached]

Harold Johnston has worked in the telecommunications industry since 1968 and in 1996 he cofounded Summit Communications, Inc. (Summit) to provide communications-related services to businesses in Hawaii.

In 1998, Johnston was approached by Al Hee, the founder of another communications services provider, Sandwich Isles Communications, Inc. (SIC), to manage SIC's telephone operations.
...
Johnston was initially hesitant to join SIC as he felt a duty to ensure Summit's financial well-being. In order to induce Johnston, Hee offered him (in addition to salary and benefits) a loan of $450,000, with the understanding that if he accepted the loan, Johnston would in turn lend the $450,000 to Summit in order to support its operations.
Johnston and SIC executed an employment agreement in 1998, which allowed Johnston to continue to serve as a director and chief executive officer of Summit, and stated that the SIC loan would become due upon the termination of Johnston's employment with SIC. Later that year, Johnston requested an additional $20,000 loan from SIC's parent company, Waimana Enterprises, Inc., and passed the funds on to Summit. In 2000, SIC sold its interest in the original $450,000 loan to Waimana.
Shortly after Johnston began his employment with SIC, Summit began to receive sizable contracts from SIC, and in late 2000 it became apparent that Johnston was needed to manage Summit full time because of its rapid growth. In 2001, with Hee's approval, Johnston resigned his position with SIC. Although his resignation triggered his repayment obligations for the SIC loan, SIC and Waimana did not demand repayment of the SIC loan at that time, nor did either company issue a Form 1099-C, Cancellation of Debt.
In 2001 SIC received a large loan from the U.S. Department of Agriculture to finance a project to provide telecommunications service to rural communities in Hawaii. With the additional financing SIC reduced its reliance on Summit, which forced Johnston to reduce expenses, cut salaries, and lay off employees. Johnston continued to work for Summit until it filed for bankruptcy in 2002, and he went back to work for SIC in 2005.
Hee met with Johnston in 2011 and notified him that the SIC loan was still due and owing.
...
Johnston arranged to begin making payments on the SIC loan via payroll deductions from his SIC paycheck.
In 2010, in connection with an audit of SIC's return, the IRS audited Johnston's return for 2007. Despite the fact that he had been insolvent in 2007, Johnston agreed to an income adjustment of $20,000 related to COD income from the Waimana loan, resulting in a partial assessment of tax due for 2007. In 2013 IRS sent Johnston a notice of deficiency determining that he had failed to report COD income for the SIC and Waimana loans in 2007.
...
The IRS argued that Johnston realized COD income in 2007 because SIC and Waimana failed to take collection action on the $450,000 SIC loan before the period of limitations for collection expired in 2007.
...
The Tax Court disagreed with the IRS's claim that the SIC loan had been canceled, pointing out that Hee testified that Waimana considered the SIC loan outstanding and that Johnston was repaying the SIC loan via payroll deductions of $1,000 per month.
...
The court also noted that if the SIC loan had been forgiven, Waimana would have a strong incentive to report the loan as discharged so that it could benefit from a bad debt deduction, and that Johnston did not receive a Form 1099-C from Waimana discharging the SIC loan.
The IRS took issue with the fact that Johnston did not make a payment on the SIC loan until after the IRS examined his 2007 return, arguing that Johnston sought to repay the SIC loan only to escape taxes. The Tax Court disagreed, noting Johnston sought to repay the SIC loan because he understood it was his obligation to repay it.
...
The IRS additionally argued that Johnston realized COD income in 2007 from discharge of the $20,000 Waimana loan. Although Johnston's agreement to this adjustment during the 2010 audit resulted in a partial assessment of tax for 2007, he disputed this claim at trial. The court agreed with the IRS, noting that the fact the Waimana loan was written off in 2007 demonstrated the intention of Waimana to forgive the loan. Additionally, the court found no evidence that Johnston was repaying the loan, or that Waimana considered the loan outstanding.
However, the court concluded that because Johnston was insolvent in 2007, and neither the IRS's nor Johnston's calculations of his insolvency exceeded the canceled debt, the COD income of $20,000 was excludable from his income under Code Sec. 108(a)(1)(B).

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