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and knew from experience that it produced the desired effect on
his hemorrhoids. Thus, petitioner's belief at this time that
Estes would be able to repay and would repay the advances was
reasonable.
However, soon after this time, the company manufacturing the
Theratech device encountered serious obstacles in marketing the
device. Petitioner testified that because of these problems, the
stock traded for about 10 cents per share. Petitioner knew that
Estes was dependent upon the financial success of the device and
the sale value of the Theratech stock to repay his debt.
Although petitioner testified that he loaned Estes the
additional sums because he thought that he needed Estes to
promote the device, the problems with marketing were not related
to promotion. According to petitioner's testimony, the marketing
problems were due to an FDA restriction, something over which
Estes had no influence. We do not think that an experienced
businessman who was aware of Estes' financial situation after
1982 could have had a reasonable expectation or belief that Estes
would be able to repay greater indebtedness. Accordingly, we
find that the advances made after 1982 did not create bona fide
debt.
Amount of the Bad Debt
The evidence submitted at trial substantiated that
petitioner advanced Estes $271,231, $52,381 of which was to pay
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