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rate of 3.61 percent to be paid annually commencing on December
31, 1992, and for the entire principal balance and any accrued
and unpaid interest to be paid on October 30, 1995. Mr. Ramsburg
transferred the proceeds of Frederick Underwriters’ 1992 loans to
Mr. Ramsburg to Kildare Timmy as capital contributions.5
5The parties stipulated that the “treatment of the Frederick
[Underwriters’ 1992] loans [to Mr. Ramsburg] on the partnership’s
balance sheet was unchanged until the partnership terminated in
1998" and that “At the end of 1997, the Frederick [Underwriters’
1992] loans [to Mr. Ramsburg] remained unpaid.” Those stipula-
tions are contrary to certain checklists (discussed below) used
by Keller Bruner and Company (Keller Bruner), the certified
public accounting firm employed by Kildare Timmy and petitioners
in preparing the tax returns for Kildare Timmy and petitioners.
(We shall hereinafter refer to the checklists used by Keller
Bruner as the Keller Bruner checklists.) As found below, Mr.
Ramsburg’s 1992 notes and Frederick Underwriters’ 1992 loans to
Mr. Ramsburg were not outstanding, according to the Keller Bruner
checklists, at the end of 1997 or on the next day (i.e., Jan. 1,
1998) on which Kildare Timmy distributed all of its assets to Mr.
Ramsburg. According to the Keller Bruner checklists, in 1995
Frederick Underwriters’ 1992 loans to Mr. Ramsburg were paid in
full and refinanced by two new loans that Frederick Underwriters
made to Mr. Ramsburg in the amounts of $140,000 and $143,500,
respectively, and that were evidenced by two promissory notes,
each providing for interest at the annual rate of 5.79 percent
and a maturity date of Oct. 30, 1998. (We shall hereinafter
refer to those 1995 loans and those 1995 promissory notes as
Frederick Underwriters’ 1995 loans to Mr. Ramsburg and Mr.
Ramsburg’s 1995 notes, respectively.) In their stipulations of
fact, petitioners and respondent disregard the information shown
in the Keller Bruner checklists and treat Frederick Underwriters’
1992 loans to Mr. Ramsburg and Mr. Ramsburg’s 1992 notes as
outstanding at the end of 1997 and on the next day (i.e., Jan. 1,
1998) on which Kildare Timmy distributed all of its assets to Mr.
Ramsburg. We presume that they do so because they believe that
the material facts (e.g., the loan principal amount, the identity
of the debtor, the identity of the creditor) surrounding both
Frederick Underwriters’ 1992 loans to Mr. Ramsburg and Frederick
Underwriters’ 1995 loans to Mr. Ramsburg are the same. Moreover,
petitioners do not contend, and in any event petitioners have
(continued...)
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