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In January 1985, a restructuring of the Weimar Bank loan
took place. On January 25, 1985, a new promissory note to Weimar
Bank in the amount of $400,000 was executed by petitioner and
Klutts. The new note represented a consolidation of: $200,000
of the original indebtedness (two-thirds of $300,000, i.e., the
amount allocated to Klutts and petitioner); $6,877.73
representing petitioner's and Klutts' share of accrued interest
on the original indebtedness; $53,919.44 representing the
principal, plus accrued interest on loan #2; $41,046.73
representing a separate personal obligation of Klutts to Weimar
Bank; and $100,000 which was applied to the debt owed by Wise Co.
to Victoria Bank. The total interest financed or refinanced
through the $400,000 loan was $30,797.17.4 In April 1985, a
payment of $53,189 was made on the $400,000 obligation.
Debt to Mrs. F.K. Wise
Petitioners executed a promissory note, dated August 15,
1975, to Mrs. F.K. Wise, the mother of petitioner. The note was
in the original amount of $37,624 and provided that installment
payments of $3,000 would be made annually in August. On August
21, 1985, petitioner signed a check for $6,000 payable to Mrs.
4
Specifically, the $400,000 consolidation note included the
financing or refinancing of $6,877.73 of accrued interest on the
original loan, $3,366.02 of accrued interest on loan #2, and
$20,553.42 representing the remaining balance of the $22,553.42
accrued interest financed on loan #2, less a payment of $2,000
made on the principal of the loan in December 1983.
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