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saw or was otherwise aware that the checks had the word "Loan"
written on them.
Finally, it was only after respondent determined the gross
estate should not be reduced for the $50,000 actually paid to the
JKH Trust that the executors realized there were two transfers of
$50,000 to decedent. This is persuasive evidence that neither
the trustees of the JKH Trust nor decedent's agent ever recorded
the transfers as loans.
9. Reporting the Transactions for Federal Tax Consistent with a
Loan.
Petitioner reduced the value of the gross estate for the
$50,000 actually paid by the executors to the JKH Trust, and for
the $50,000 claimed as a debt owed by decedent. However, it was
only after respondent determined that the gross estate was
improperly reduced for the $50,000 actually paid to the JKH Trust
that petitioner amended its petition to include the second
transfer of $50,000 as a debt of decedent.
Based on our examination of the entire record, we find that
petitioner has not established that decedent entered into a bona
fide creditor-debtor relationship with the JKH Trust at the time
of the transfers at issue. We find that petitioner has failed to
satisfy its burden of proving that the transfers at issue
constituted loans or that decedent knew or had any notice that
the amounts she received from the JKH Trust were subject to
repayment. See Estate of Caplan v. Commissioner, 42 T.C. 446,
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