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shown by a preponderance of the evidence that the note had no
fair market value; therefore, we must affirm respondent’s
determination.
Moreover, the solvency of the maker of a note is of prime
importance in determining whether it is worth its face value.21
Pack v. Commissioner, T.C. Memo. 1980-65. In the instant case,
the partnership was solvent. On Schedule L of its 1991 Form
1065, the partnership reported “partnership equity accounts” in
excess of $400,000 for 1990 and 1991. Additionally, petitioner
testified that his three minor children, who were partners in the
partnership, had “considerable funds of their own.” Petitioner
was a partner in the partnership. He signed the First Amendment
to Kiddies 38 Agreement individually, as president of Farm &
Grove, and as guardian of his three minor children, stating that
the consideration for the lots would be paid by the partnership
to petitioner personally and to Farm & Grove. Thus, we have no
reason to believe that the partnership or its partners would not
make good on the payments contemplated by the sales agreement and
the promissory note.
21Respondent argues on brief that he determined that the
fair market value of the contractual promise and the note was the
face amount.
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