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deductions that result from the operation of a trade or business
previously engaged in. See Schwarcz v. Commissioner, 24 T.C.
733, 740 (1955).
Mr. Gregersen and Mr. Petty testified that the parties
expected that Mr. Gregersen’s newspaper business would be
primarily responsible for paying the note. See Union Bank v.
Swenson, 707 P.2d 663, 665 (Utah 1985) (stating that “parol
evidence is admissible to show the circumstances under which the
contract was made or the purpose for which the writing was
executed.”). Mr. Petty further testified that he viewed Mr.
Gregersen as a guarantor. At the time the note was executed
EBNI’s stock was collateral for the note. Moreover, the assets
and liabilities relating to EBN were transferred to EBNI in 1989.
Thus, EBNI was EBN’s successor in interest to the note. See
Macris & Associates, Inc. v. Neways, Inc., 986 P.2d 748, 752
(Utah Ct. App. 1999)(quoting Florom v. Elliot Manufacturing Co.,
867 F.2d 570, 575 n.2 (10th Cir. 1989)).
The note was not listed on EBNI’s bankruptcy schedules, and
EBNI’s reorganization plan did not provide for payment of the
note. Mr. Petty testified that he did not object to the omission
of the note because he knew that the other signers (i.e., Mr.
Gregersen) were liable. On May 28, 1993, the U.S. Bankruptcy
Court for the District of Utah entered an order confirming EBNI’s
Chapter 11 reorganization plan. This order confirming EBNI’s
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