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Georgiou relies most heavily upon the books and records of
Kolonaki and upon purported loan repayments as evidence of his
intention to repay the advances. Georgiou refers to two
documents to support his position: The Security Agreement, dated
1980, which gave Kolonaki a present security interest in
Georgiou's personal assets, and the Consent by Directors
document, dated 1988, which established a maturity date and
interest rate for the advances.
Prior to the creation of the Consent by Directors document,
there was no interest rate and no interest accrued on the
advances. Both of these documents, however, were created in 1991
and backdated. This Court's analysis in Saigh v. Commissioner,
36 T.C. at 420, provides an appropriate response to Georgiou's
arguments:
[Taxpayers] argue that actions taken subsequent to
the date of transfer, when combined with the original
event, clearly establish the real intention of the
parties. They rely upon the confirmation of the loan
by the directors of Building Inc. and Investment and
the execution and acceptance of the note. This action
was not undertaken until 2 months after the transaction
in issue occurred. No explanation is given of why
nothing was done or said at the July 25, 1946, meeting.
While the confirmation and note would ordinarily be
some evidence, other facts present in the record
destroy their probative value. The actions taken were
tardy, and undertaken only after reflection and a shift
in opinion. [Taxpayers] would overlook the
interlocking control between Investment and Building
Inc. What was done was not the act of independent
directors, i.e., it was not the result of bargaining
between parties, each looking after his own self
interest. Saigh acted on both sides and, indeed,
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