-9-
satisfy J & M's other outstanding liabilities. Apparently,
respondent interprets the contemporaneity of these events to
support her contention. However, we draw no such inference from
the timing of these events. Rather, we think that petitioner, in
two contemporaneous but separate transactions, assumed
approximately $700,000 of liabilities in exchange for his
interest in J & M and made a loan to Tag Coal. We reach this
conclusion by applying the above mentioned factors to the facts
of this case.
First, the parties genuinely intended the amount advanced by
petitioner to be a loan. Petitioner and Mr. Templeman both
testified at trial that they considered the advance to be a loan.
We found petitioner and Mr. Templeman to be credible witnesses,
and we have no reason to question their veracity.
Second, the parties' intent is confirmed by written
instruments characterizing the advance as a loan. For example,
in a document styled "Agreement" dated August 30, 1984, the
amount advanced by petitioner is referred to as a "loan made to
Tag Coal Corporation for delinquent taxes in the amount of
$175,970.51." Additionally, petitioner referred to the payment
as a loan on the memo line of the check issued to Tag Coal.
Finally, the advance was recorded as a loan on Tag Coal's
corporate books.
Third, within approximately one year after the advance, Tag
Coal repaid petitioner $44,806.72 of the $175,970.51 advanced.
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