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$33,175 with interest at 15 percent per year on the unpaid
balance. Immediately after the purchase, petitioner and Klute
each owned 50 percent of the stock of Mid-Nebraska.
Mid-Nebraska struggled financially. It borrowed additional
funds from York, from Klute’s spouse (Mrs. Klute), and from his
company, Klute Land & Cattle Co., Inc. (Klute Land & Cattle).
Klute eventually decided to terminate his relationship with Mid-
Nebraska. Consequently, on or about February 17, 1983, Mid-
Nebraska redeemed all of Klute’s stock, he resigned all of his
positions with that corporation, and it released him from any
further liability on the note and any debts or notes Mid-Nebraska
owed York. Mid-Nebraska also agreed to pay $22,000 to Mrs. Klute
and $23,000 to Klute Land & Cattle in payment of the money it
owed them. Mid-Nebraska paid the $22,000 to Mrs. Klute. Of the
$23,000 owed to Klute Land & Cattle, Mid-Nebraska paid Klute
$8,000 on or about February 17, 1983, and gave him a note for the
balance due, payable in three annual installments of $5,000 each
commencing March 1, 1984. Klute ultimately received only one
$5,000 payment.
After the redemption of Klute’s stock, petitioner was Mid-
Nebraska’s sole shareholder, and he alone was responsible for
repayment of the $33,175 loan from Mid-Nebraska. Neither Mid-
Nebraska’s payments to Klute, Mrs. Klute, and Klute Land & Cattle
nor its failure to pay the sums owed Klute affected petitioner’s
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