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deductions on its 1997 income tax return. However, that return
is not consistent with its financial statements, which show a net
loss of $20,875 before net operating losses are considered.
The estate contends the funds from the stock subscription
agreement reduced Advance Leasing’s debt obligations, made the
balance sheet cleaner, and made it easier for the company to
secure outside financing. Despite this claim, Advance Leasing
did not receive the funds until after decedent died.
Advance Leasing’s financial situation remained poor on April
29, 1997. James McBride (an attorney for Advance Leasing and the
brother of McBride) testified that Advance Leasing and its
business had negligible, if any, value when the stock
subscription agreement was entered into on April 29, 1997. James
McBride advised his brother regarding the stock subscription
transaction, and he drafted the stock subscription agreement and
the $400,000 promissory note. James McBride stated that it would
have been futile for HELP to demand full payment by Advance
Leasing because Advance Leasing lacked the ability to repay the
more than $864,000 it owed to HELP at the end of 1996. James
McBride testified that HELP wanted Advance Leasing to survive in
the hope that it would generate income and repay its debt to
HELP.
James McBride’s testimony is corroborated by the estate tax
return for the Estate of Bob Hughes and the Advance Leasing
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