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value is of no significance--the test is value when given, not
the exercise of hindsight. Pierce v. Commissioner, 61 T.C. 424,
435 (1974). Accordingly, under California law a bona fide loan
may be made for reasonably equivalent value. See Reidy v.
Collins, 26 P.2d 712, 715 (Cal. Ct. App. 1933); Pierce v.
Commissioner, supra at 435.
Chris Powell, KBI's controller from 1984 through 1989,
testified that, during his tenure at KBI, Mr. Solaas repaid
amounts he borrowed from KBI. Mr. Powell's testimony generally
was credible, and we rely on his testimony as it was supported by
the record. See Diaz v. Commissioner, 58 T.C. 560 (1972) (basing
analysis upon evaluation of the entire record and the credibility
of witnesses); see also Estate of Neff v. Commissioner, T.C.
Memo. 1997-186. Additionally, from 1989 through 1992 Mr. Solaas
made repayments to KBI. Repayments suggest that withdrawals were
made with the intent to repay. See Pierce v. Commissioner,
supra at 431; Miele v. Commissioner, 56 T.C. 556, 567-568 (1971),
affd. without published opinion 474 F.2d 1338 (3d Cir. 1973);
Schneller v. Commissioner, T.C. Memo. 1996-62, affd. without
published opinion 129 F.3d 1265 (6th Cir. 1997). Furthermore,
KBI charged Mr. Solaas interest on the money it loaned to him.4
4 KBI did not loan Mr. Solaas any money after Feb. of 1993,
but between Feb. of 1993 and Mar. of 1994 the amount Mr. Solaas
owed on the loans grew from $911,073.15 to $1,011,340. This is
(continued...)
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