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not support this contention. We conclude that this transaction
was not a bona fide loan.
Nor do we find that the transaction between the decedent and
Mr. Pasko was a bona fide loan. Although the transaction is
evidenced by a "note" signed by both Mr. Pasko and the decedent,
the note provides no schedule of repayment, no interest, no
security, and no collateral. Nor were payments actually made on
this "note". We conclude that this transaction was not a bona
fide loan.
Because we find that none of the bad debts claimed by the
decedent were bona fide loans, we proceed to address whether the
amounts of the purportedly worthless debts are included in the
decedent's estate tax computation as adjusted taxable gifts. An
estate's tax liability equals (1) the tentative tax on the sum of
the taxable estate plus the adjusted taxable gifts, less (2) the
aggregate tax on all gifts made after December 31, 1976. Sec.
2001(b). Adjusted taxable gifts are computed by subtracting
certain deductions (none of which are applicable herein) and
exclusions from the taxable gifts that were made during the
taxable period. Sec. 2001(b); Estate of Smith v. Commissioner,
94 T.C. 872, 874 (1990). A taxable gift is any transaction
whereby property is passed gratuitously to another. Sec.
25.2511-1(c), Estate Tax Regs. The decedent is allowed to
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