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Before August 31, 1994, there was no note evidencing the $31,705.
The demand promissory note also covered additional principal
amounts advanced by petitioner to Koehler that were to be added
to the $31,705 shown on a schedule attached to the note.
Interest, at the rate of 5 percent, was provided for from the
date of each principal disbursement.
Beginning on August 31, 1994, through December 30, 1994,
petitioner advanced an additional $45,000 to Koehler, in nine
semimonthly payments of $5,000 each on the 15th and the last day
of each month. Before the $5,000 semimonthly payments, Koehler
had been receiving monthly compensation from Cap Corp. Koehler
suggested that petitioner label the $5,000 payments to Koehler as
loans, as opposed to compensation, because Koehler’s former wife
was then seeking increased alimony payments.
Koehler had experienced financial difficulties since his
divorce in 1987 or 1988 and was paying $4,000 in monthly alimony.
From at least 1992 through 1996, Koehler’s financial condition
was poor, and he was unable to repay the advances received from
petitioner. By August 31, 1994, when petitioner began making its
nine $5,000 semimonthly payments to Koehler, Crispin knew that
Koehler was insolvent.
Beginning on August 31, 1994, through December 1, 1995,
$4,555 in interest accrued on the August 31, 1994, demand
promissory note. During that same period, Koehler paid
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