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the Putmans believed was his close friendship with them, and his
position as an attorney, to steal their inheritance.4
Petitioner's engaging in the solitary activity of writing up
promissory notes did not create loans between him and the estate.
The promissory notes evidence no more than an inchoate intention
to repay the amounts petitioner withdrew from the estate. Such
an intention, even if there was one, cannot transform
misappropriations into loans. Moore v. United States, 412 F.2d
974, 978-980 (5th Cir. 1969). As the court stated:
The reasoning of James is that while an embezzler has a
legal obligation to repay and may intend to repay, his
legal obligation and intent are not the same as an
actual agreement between lendor and borrower entailing
"consensual recognition" of an obligation to repay and
exact conditions of repayment. * * * The absence of a
consensual agreement between the party providing the
money and the party receiving it is fatal to the
Trustee's contention that the money should be excluded
from gross income on a loan theory. Therefore, it must
be treated as income. [Id.; Katz v. Commissioner,
supra.]
Petitioner's writing up of promissory notes was insufficient
to create a consensual relationship between him and the
beneficiaries of the estate. Petitioner's stipulation that the
beneficiaries of the estate were unaware of his withdrawals
4 Even if petitioner continues to make the monthly
"restitution" payments of $230 per month for the rest of his
life, these amounts are so small that the monthly payments will
never begin to reduce the principal obligation to any extent. It
is unfortunate for Mrs. Putman's heirs that the obligations that
will be generated by our decision herein may interfere with
petitioner's ability to pay his obligations under the outstanding
criminal and civil judgments.
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Last modified: May 25, 2011