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Commissioner, 56 T.C. 1324, 1338-1339 (1971), affd. without
published opinion 496 F.2d 876 (5th Cir. 1974).
A determination of whether there was an intent to create
bona fide indebtedness depends on all the facts and
circumstances; not every factor gets equal weight, and no one
factor is controlling. Alterman Foods, Inc. v. United States,
supra at 876 n.6. Arrangements between a corporation and a
controlling shareholder are subject to close scrutiny. Electric &
Neon, Inc. v. Commissioner, supra at 1339.
Based on the evidence in this case, we conclude that there
was no intention to create bona fide indebtedness or to repay the
advanced amounts when petitioner received the Ranch from Paz, and
consequently the transfer constituted a dividend. We base this
conclusion on the numerous instances in which petitioner
disregarded the purported debt and his obligations thereunder.
First, no promissory note evidencing petitioner's
indebtedness to Paz was drafted or executed at the time of the
transfer of the Ranch to petitioner. This "error" was not
corrected until approximately 2 years later when an accountant at
Davidson, Eagleson who was attempting to compute petitioner's
gain or loss on the later sale of the Ranch discovered that
there was no note. As a result, Paz was unsecured during this
period. The absence of a written promissory note was not
corrected when petitioner sold the Ranch to third parties, even
though petitioner contends that the Ranch was security for the
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