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lent petitioner $80,000. He agreed to invest the total sum of
$240,000 in his operating companies and to provide the
Mirhosseini family with a 25-percent-per-year return on the
principal, payable quarterly, in advance. At approximately the
same period of time, petitioner borrowed other funds at interest
rates of 8 percent and 12 1/2 percent.
The parties stipulated that CTC's or petitioner's 1979 and
1980 journals reflected payments to the Mirhosseini family. This
stipulation was in error and is in conflict with the documentary
evidence of record. The disbursements journals do not reflect
the claimed interest payments to the Mirhosseini family for the
years 1979, 1980, and 1981. Stipulations contrary to the actual
facts disclosed by the record may be disregarded. Mead's Bakery,
Inc. v. Commissioner, 364 F.2d 101, 106 (5th Cir. 1966), revg.
T.C. Memo. 1964-104. Furthermore, the workpapers recapping 1980
interest expense are not sufficient documentation that payment
was made or that the amounts shown are interest. Thus,
petitioner has not substantiated any payments to the
Mirhosseinis. Moreover, he has not shown in which of his
operating companies the funds were invested. Therefore, we hold
that the amounts paid to the Mirhosseini family are not
deductible as interest expense.
The $30,000 and $45,000 of interest expenses claimed in 1980
and 1981 for payments to the J.J. Zand Trust are attributable to
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