-27-
1. Promissory Note or Other Evidence of Indebtedness
Petitioner never signed any promissory note with respect to
the debt assumptions at issue. While it is true that petitioner
never executed a note or other singular debt instrument, we do
not consider the absence of such an instrument a significant
factor in this particular case. It is quite clear that a valid
debt may exist between parties even where no formal debt
instrument exists. Id. This is particularly true in the case of
related parties since formal debt paraphernalia of this type
between a shareholder and his wholly owned corporation are not
necessary to insure repayment as the case may be between
unrelated entities. Id. at 377-378.
However, petitioner did not introduce any other evidence,
e.g., corporate minutes, to substantiate his assertion that he
assumed his corporations's indebtedness, or that INI substituted
him for Development as the debtor. We consider this to be a
significant factor that weighs against petitioner.
2. Interest
Petitioner allegedly assumed Development's indebtedness to
INI in two transactions, both of which were recorded by adjusting
journal entries on December 31, 1990. The first amount recorded
was $377,800; and the second amount was $40,178. Neither entry
provides any indication that the assumed debt was to bear
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