Wallace R. Noel and Robinette Noel - Page 25

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          this argument because she calculated that the principal balance             
          of petitioner's borrowings was something less than the $1,800,000           
          he ultimately paid to the bank.  Respondent therefore concluded             
          that the remaining balance of petitioner's payment represented              
          interest accrued by the bank.  Specifically, respondent deter-              
          mined that $1,386,761 of petitioner's $1,800,000 payment to the             
          bank constituted payment of principal, and $413,239 related to              
          interest.  Respondent calculated the principal balance by tracing           
          payments through the bank's "Loan Commitment" sheets to determine           
          how the funds were actually disbursed.  This analysis was                   
          detailed, credible, and persuasive.                                         
               Petitioner relies on "Interest Paid" statements he received            
          from the bank to support his contention that more than $413,239             
          of the $1,800,000 payment to the bank related to interest.                  
          Included in these statements was a $71,321.97 amount of interest            
          "paid" for 1990.  However, a bank "Charge Off Authorization" form           
          indicates that the $71,321.97 amount was actually written off by            
          the bank.  Therefore, the Court finds that the bank's "Interest             
          Paid" statements do not reflect interest actually "paid" by                 
          petitioner.  Petitioner failed to introduce any other evidence at           
          trial concerning the principal balance on the notes or the                  
          interest paid to the bank.  Accordingly, we sustain respondent's            

          only of the interest expense the Court determines has been "paid"           
          in 1990 but not deducted by petitioner due to sec. 163(d)                   

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