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basis in Mid-Nebraska. He was not liable for, nor was he
required to make, any of those payments.
Mid-Nebraska continued to struggle financially. Petitioner
borrowed money from his spouse and against his life insurance and
his 401(k) plan to put into Mid-Nebraska. It is not clear,
however, how much additional money petitioner ultimately put into
the business, or whether Mid-Nebraska’s bookkeepers and
accountants treated the money as capital contributions or loans
to the corporation on its books and records, or whether Mid-
Nebraska repaid to petitioner any of that money before September
8, 1992.
During 1988 or 1989, Dean Sack (Sack), York’s president,
chairman of the board, and principal owner, advised petitioners
to purchase the office space in the condominium building in which
Mid-Nebraska had located its offices (office condominium). To
effect the purchase of the office condominium and to satisfy
certain bank lending policies, York lent Mid-Nebraska $16,000.
Mid-Nebraska then lent the money to petitioners, and they used it
to make a downpayment toward the purchase of the office
condominium. Petitioners borrowed the balance of the $89,000
purchase price of the office condominium from York, and they
agreed to make monthly payments toward repayment of that loan.
Petitioners purchased the office condominium in their own names,
and they considered it to be a personal asset. From the time
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