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completed on a cumulative basis, so as to account for the total
amount of the transfers from PK Ventures to PKVI LP in
preparation for the yearly audit of these businesses’ financial
records. Moreover, at the time that Rose signed the $1,516,246
promissory note (i.e., the note representing the aggregate amount
of the transfers from PK Ventures to PKVI LP during 1986 through
1991), Rose, as a general partner with a 70-percent interest in
PKVI LP, neither intended to have PKVI LP repay any of this
amount to PK Ventures nor intended to repay any of this amount
himself. These facts undermine the reliability of the PKVI LP
promissory notes. In addition, the purported terms of the
PKVI LP promissory notes were contradicted by the statements made
in PKVI LP’s audited financial statements for the year ended
December 31, 1990, and PKV&S’s audited consolidated financial
statements for the year ended December 31, 1991, that the
transfers from PK Ventures, TBPC, and TPTC to PKVI LP did not
bear interest. Accordingly, we are unpersuaded that the
existence of the PKVI LP promissory notes justifies a conclusion
that the transfers from PK Ventures to PKVI LP were bona fide
loans.
Second, unlike the basic structure of PKVI LP’s debt to
unrelated parties, the transfers from PK Ventures to PKVI LP were
not secured by the hydroelectric properties owned by PKVI LP; did
not have a fixed payment date; and, as established by PKVI LP’s
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