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legacies to David and Harvey constituted adequate consideration
for the Kotler Note. Respondent disagrees with this contention.
In the previous section, we concluded that petitioner has
not substantiated the amount or value of assets held by Earl at
the time of his death and that claims of creditors may have
reduced or eliminated the amount of funds available to satisfy
legacies.
Even if we were to assume that Earl had sufficient assets at
the time of his death to pay the legacies to David and Harvey,
petitioner would not be entitled to the deduction. Pursuant to
Earl's will, Bonnie, in her role as "executor", had the option to
allow David and Harvey each to receive either $150,000 or a
promissory note for that amount. She chose to give them the
Kotler Note.2 David and Harvey did not relinquish anything of
value in exchange for this note. Further, the indebtedness was
not contracted bona fide, because David and Harvey had no choice
but to accept the Kotler Note on whatever terms Bonnie dictated.
Accordingly, we conclude that petitioner has failed to meet its
burden of proving that the Kotler Note was supported by full and
adequate consideration in money or money's worth.
IV. The USM Investment
2 The $305,000 principal balance of the Kotler Note
included $5,000 for David and Harvey to host a party in
remembrance of Earl.
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