Dori R. Merriam, Transferee - Page 14

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               We decide whether a witness is credible on the basis of                
          objective facts, the reasonableness of the testimony, and the               
          demeanor of the witness.  Quock Ting v. United States, 140 U.S.             
          417, 420-421 (1891); Wood v. Commissioner, 338 F.2d 602, 605 (9th           
          Cir. 1964), affg. 41 T.C. 593 (1964); Pinder v. United States,              
          330 F.2d 119, 124-125 (5th Cir. 1964); Concord Consumers Hous.              
          Coop. v. Commissioner, 89 T.C. 105, 124 n. 21 (1987).                       
               On cross-examination, when presented with documents offered            
          to impeach her testimony, petitioner admitted that she had signed           
          (1) a promissory note in which she promised to pay Napa                     
          $421,843.22; (2) a consent to action in which she, as sole                  
          director, approved loans from Napa to her totaling $702,503.90 in           
          exchange for her promissory note; and (3) at least 54 Napa                  
          checks, including 12 payable to her.                                        
               Petitioner is a college graduate.  We believe that                     
          petitioner knew that she could not sign a corporate check without           
          authority from Napa.  Petitioner denied knowing anything about              
          Napa’s liquidation and testified that she did not sign the Napa             
          liquidation document.  However, her signature on that document              
          was notarized.  Although the notarization was made by Lalosh, an            
          employee who worked in James Merriam’s office, Lalosh testified             
          in this case on matters other than the notarization, and we have            
          no reason to doubt her integrity or the validity of the                     

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