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discharge of Colonial Bank's loan to Mr. Bradshaw, and not
from the illegal check-kiting scheme to which Mr. Bradshaw
pled guilty. Petitioners further contend that the income
from Colonial Bank's discharge of its loan is not
includable in petitioners' income because they were
insolvent by more than the amount discharged. Sec.
108(a)(1)(B).
We disagree with petitioners' factual contention that
Mr. Bradshaw received the proceeds of the illegal check-
kiting scheme as a loan or other bona fide indebtedness
from Colonial Bank. While petitioner may have had a legal
obligation to repay the funds that he had fraudulently
obtained from the bank, the transaction did not involve a
loan because a distinguishing characteristic of a loan, the
intention of the parties that the money advanced be repaid,
was missing. See Moore v. United States, 412 F.2d 974,
978-980 (5th Cir. 1969); United States v. Rochelle, 384
F.2d 748, 751 (5th Cir. 1967); Sowell v. Commissioner, 302
F.2d 177, 181 (5th Cir. 1962), revg. T.C. Memo. 1961-115.
In this case, there was no "consensual recognition" by both
petitioner and the bank of an obligation to repay and the
exact conditions of repayment. E.g., Moore v. United
States, supra at 979-980.
We do not accept petitioner's assertion that he
obtained the proceeds of his check-kiting scheme from
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