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Kelley Co. v. Commissioner, 326 U.S. 521 (1946); Zimmerman v.
United States, supra.
The key inquiry is not whether certain indicia of a bona
fide loan exist or do not exist, but whether the parties actually
intended and regarded the transaction as a loan. See Estate of
Chism v. Commissioner, 322 F.2d 956, 959-960 (9th Cir. 1963),
affg. Chism Ice Cream Co. v. Commissioner, T.C. Memo. 1962-6;
Estate of Van Anda v. Commissioner, 12 T.C. 1158, 1163 (1949),
affd. per curiam 192 F.2d 391 (2d Cir. 1951). Petitioner's
intent can be established from an examination of the facts
surrounding the transfers to Estes. For the reasons listed
below, we find that petitioner had a reasonable expectation and
belief that he would be repaid for transfers he made to Estes up
to 1983, and that these transfers are bona fide loans. Transfers
made after 1982, however, are not.
Rather than foreclosing Estes' collateral upon the failure
of the gold-dredging operation, petitioner placed the stock in a
joint account. As the inventor of the Theratech device, Estes
owned many more shares than the 100,000 shares in the account,
which had a value of approximately $1 per share at this time.
Therefore, although Estes considered himself to be in financial
trouble, he appeared to have financial resources and would be
able to repay the advances. In addition, petitioner, who is an
experienced businessman, had used the Theratech device many times
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