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the “G” rates as an estimate of the interest paid on the loan.
Second, although there is no direct evidence of an interest
reserve’s having been established with respect to the land loan,
Mr. Waters testified that $1.4 million was paid into the land and
that $60,000 could have been used for fees or may have been used
as an interest reserve. Petitioners again have not precluded the
possibility of a double-counting of their claimed additional
interest expense.
Petitioners also claim that they paid $113,812 in interest
to California Federal in 1991 with respect to the refinancing of
the First National Bank loan. Petitioners rely on a statement
from California Federal which states that the total interest paid
in 1991 was $113,812.35. Although this interest appears to have
been paid on the California Federal refinancing of the original
First National loans to Mr. Assaad, it is also clear that the
interest was paid on the entire amount of the California Federal
loan of $1.1 million. However, petitioners received cash back in
that loan transaction in the amount of $120,802.70, which amount
they did not establish was paid into the Atherton project.
Petitioners do not rely upon that amount on brief in computing
their NOL for 1992. Any interest deduction would have to be
reduced to account for this amount, because this amount could
have conceivably been used for personal expenses. Further, per
our discussion above, petitioners did not establish that the
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