Estate of Robert G. Kluener, Deceased, Donald E. Hathaway, Co-executor and Charlotte J. Kluener - Page 29

            funds held in APECO Equine's name was preconceived.  Hallowell v.                             
            Commissioner, supra at 608-609.                                                               
                  We also are not inclined to credit petitioners' assertion                               
            that Fifth Third's refusal to renew APECO's loans during June                                 
            1990 was unexpected.  APECO was sustaining losses and was having                              
            difficulty developing the Planatronic prior to that time.  Mr.                                
            Kluener guaranteed its debt, but his financial condition was poor                             
            during 1989 and 1990, due principally to the collapse of his real                             
            estate ventures, which was one of the reasons that the decision                               
            was made to sell the horses.                                                                  
                  Mr. Kluener's need to make payments on his debts to Fifth                               
            Third does not even explain why all funds held in APECO Equine's                              
            name were distributed because, pursuant to the renegotiation of                               
            his loans from Fifth Third, he was obligated to reduce the                                    
            principal amount of his debt by at most $1,500,000, and he                                    
            reduced it by only $1 million before it was again renegotiated.                               
            In fact, Mr. Kluener lent $776,000 of the amount distributed back                             
            to APECO.                                                                                     
                  Furthermore, it is difficult to justify Mr. Kluener's use of                            
            the funds that had been held in APECO Equine's name to pay down                               
            his loans to Fifth Third.  As part of the renegotiation of the                                
            loans, Fifth Third restricted Mr. Kluener's ability to withdraw                               
            funds from his agency account for purposes other than the payment                             
            of his or APECO's obligations to it.  Moreover, the net                                       
            distributions that he received with respect to his APECO stock                                
            were also to be applied to pay his obligations to Fifth Third.                                




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