Maurice D. and Elinor Taylor - Page 16

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             considered the repayments restitution for the losses Irvington                                       
             Federal incurred, not a loan.  The line of credit format employed                                    
             by Mr. Ottey was solely for the bank's internal accounting use.                                      
             Further, the confessed judgments signed by petitioners do not                                        
             characterize the repayments as "debt" as in Buff, but only as                                        
             "advances" (namely, the overdrawn funds).  Moreover, we are                                          
             cognizant of the fact that petitioner's plea agreement with the                                      
             U.S. Attorney's Office with respect to his cash structuring charge                                   
             required petitioner to make restitution to Irvington Federal.                                        
                    Second, there is no evidence that petitioners would have                                      
             qualified for a loan from Irvington Federal.  See Quinn v.                                           
             Commissioner, 62 T.C. 223, 229 (1974), affd. 524 F.2d 617 (7th Cir.                                  
             1975) (holding that no loan transaction occurred and embezzled                                       
             funds were includable in income where the savings and loan could                                     
             not make a loan to the taxpayer under State law).  There is no                                       
             evidence that the bank conducted a check of petitioners' credit-                                     
             worthiness before the confessed judgments and mortgages were                                         
             executed. Additionally, there is no evidence of a continued                                          
             relationship between petitioners and Irvington Federal outside of                                    
             the restitution payments, whereas in Buff the taxpayer continued to                                  
             work for the employer for 1 month.                                                                   
                    We do not believe petitioners' July 1988 execution of                                         
             confessed judgment notes and mortgages to cover the bank's losses                                    
             was intended by the parties to create a consensual loan between                                      

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