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that the Kersting programs had economic substance beyond the
creation of tax benefits.
ii. Lack of Genuine Debt/Waltz of Funds
Judge Goffe also concluded that the test case petitioners
failed to show that Kersting promissory notes constituted genuine
debt or that interest was actually "paid" on the loans within the
meaning of section 163(a). As previously mentioned, Mr. Cravens
participated in consecutive stock subscription plans in 1979 and
1980. Relying upon the specific language used in stock
subscription agreements underlying the stock subscription plan
and the leasing corporation plan, Judge Goffe held that the
agreements, standing alone, did not create an unconditional debt
obligation. Judge Goffe further denied deductions for
subscription interest under the Stock Subscription Plan and the
leasing corporation plan on the ground that such interest was
not "paid" within the meaning of section 163(a) by virtue of
Mr. Kersting's waltz of funds. In particular, Judge Goffe
identified two specific instances in which Mr. Kersting waltzed
funds affecting stock subscription plans. In one instance, the
waltz concerned primary loan funds, while in the other the waltz
concerned leverage loan funds. Considering the bases for Judge
Goffe's analyses on these points, we are convinced that neither
Mr. Cravens' pro se status nor his testimony was material to
Judge Goffe's holdings that the test case petitioners failed to
show that Kersting promissory notes constituted genuine debt or
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