Dennis C. Gandy - Page 14

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                         Date                Amount                                   
                         Apr. 5, 1985        $22,600                                  
                         Sept. 21, 1985      44,975                                   
                         Mar. 25, 1986       22,600                                   
                         Oct. 21, 1986       44,975                                   
               Production Credit Association                                          
               Production Credit Association (PCA) is a lending institution           
          that makes loans to farmers and ranchers.  Petitioners began                
          borrowing from PCA in about 1979 and borrowed throughout the                
          years in issue.  Generally, the activity on the PCA loans was               
          seasonal; petitioners received disbursements from PCA beginning             
          in the late summer through fall and early winter and made                   
          payments in the spring of the year.  The PCA loans had maturity             
          dates of 1 year or less, but any unpaid balance at the maturity             
          date would be renewed with a new maturity date.  Disbursements of           
          PCA loans to petitioners during the specified years totaled:                
                              Year      Amount                                        
                              1985      $505,000                                      
                              1986      260,000                                       
                              1987      203,700                                       
          Petitioners made payments on the PCA loans during these same                
          years by checks drawn on the nursery bank account.                          
               Prior to petitioners' receiving the SBA loans, PCA held as             
          collateral the equipment and nursery stock inventory and some               
          real estate.  The SBA took a blanket lien with first priority on            
          petitioners' assets, moving PCA to a secondary position.                    
          Thereafter, petitioners used the CD’s that were funded with the             

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