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advances. Three other witnesses--petitioner's long-time
bookkeeper, Judy Williams, petitioner's long-time accountant,
Ryan Patrick, and petitioner's bonding agent from 1987-91, Eric
Sander--also testified on behalf of petitioner, on the basis of
their personal knowledge of petitioner's business, including the
business relationship between petitioner and Mark Mann.
We found the testimony of all five witnesses credible,
forthright, and consistent. In addition, we note that Richard
Mann, although he is not a lawyer, very ably represented
petitioner at trial.
The entire record discloses that some of the traditional
indicia of a debtor-creditor relationship were present in this
case, and that some were not. For example, there was no fixed
schedule for repayment, no collateral, and no written loan
agreement (other than the notes), and petitioner never demanded
payment, much less took legal action to try to enforce repayment.
However, starting within a short time after the advances
commenced, the advances were evidenced by notes; interest was
charged; and petitioner's accounting records and financial
statements reflected the advances as loans. More importantly,
petitioner reported the advances as loans on its tax returns, and
accordingly included substantial amounts of interest in its
taxable income. In addition, Mark Mann made some repayments from
time to time, including one relatively large repayment of
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