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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 the
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