- 19 - approximately $28,000, which represented his entire after-tax bonus from a successful contracting job. This accrual of taxable interest and this repayment made from taxable salary are strong circumstantial evidence that petitioner and Mark Mann intended to create a debtor-creditor relationship and did nothing to impair that relationship over the life of the advances. With respect to Mark Mann's solvency, there is little in the record about his financial condition when the advances began. However, it is clear that in July 1992 Mark's liabilities were substantially in excess of his assets, and we believe it quite likely that Mark had been in financial difficulty for some period prior to that time. Nevertheless, prior to his period of unemployment beginning in September 1991, Mark Mann had always believed he would be able to repay petitioner's advances, and Richard Mann and he had never discussed forgiving or canceling them. Petitioner's accountant credibly testified that he had never had any reason to suspect Mark would not be able to repay the advances, and that petitioner always intended to be repaid. Petitioner's bookkeeper, and petitioner's bonding agent, also both testified that they never thought Mark would be unable to repay the advances. On the basis of all the facts and circumstances of this case, we find that petitioner and Mark Mann intended to create and did create a real debtor-creditor relationship, when thePage: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
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