Don C. Reser and Rebecca Jo Reser - Page 14

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          notes payable to petitioner.  Petitioner explains that the loan              
          was not listed as one to him from DRPC for internal bookkeeping              
          purposes, i.e., the other loan was from his own funds, and the               
          one shown as from Frost Bank actually was from the proceeds                  
          petitioner obtained from Frost Bank.  Similarly, petitioner                  
          claims that the bank notes were executed by himself and DRPC for             
          bookkeeping purposes.  We are not persuaded by this argument.  We            
          acknowledge that the bank was not concerned with who took out the            
          loan so long as Don Test offered collateral and a personal                   
          guaranty.  We are not persuaded that DRPC listed the loans on its            
          returns as it did for internal bookkeeping purposes; rather, it              
          seems that such loans were shown as coming from Frost Bank                   
          because they were in fact from Frost Bank to DRPC.                           
               Petitioner argues that he alone had the power to decide how             
          to capitalize DRPC.  He also argues that he obtained the loan in             
          his individual capacity.  We agree that he obtained the loan, but            
          note that he was the only officer and shareholder of DRPC, and               
          therefore he was the only agent who could obtain a loan for that             
          corporation.  The fact is that petitioner executed the notes both            
          personally and as the president of DRPC; we find that rather than            
          obtaining the credit line from Frost Bank while acting in his                
          personal capacity, he obtained the loans while acting in his                 
          personal capacity and as the agent of DRPC.                                  
               Respondent determined that this alleged debt from DRPC to               
          petitioner will not give rise to basis under section 1366(d)(1).             




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