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Indeed, no payments were made on the Note until July 22, 1993,
after a revenue agent auditing Paz met with one of petitioner's
accountants and requested a signed copy of the Note and evidence
of repayment. Petitioner contends that his failure to make
payments when due resulted from oversight, specifically, his
failure to recall when payments were due and the failure of his
accountants to remind him. We do not find this contention
credible. Even accepting the view that petitioner was a busy
executive who relied on his accountants, we do not believe that
he could fail to recall at some point, over a period exceeding 3
years, his obligation to repay $150,000 on which interest was
accruing, particularly in light of the fact that, during such
period, he liquidated the asset that was the purported security
for the obligation. Petitioner received substantial cash upon
the sale of the Ranch to third parties in August 1991, and while
this was concededly before the agreed due date of his first
repayment, payment on the Note was past due when petitioner
converted the third-party purchasers' promissory note to cash in
October 1992. We believe that if petitioner had intended to
create bona fide indebtedness to Paz, he would have made some
payment on the Note prior to a request by a revenue agent for
evidence of repayment.
Finally, the circumstances surrounding the ex post facto
execution of the Note cast doubt upon the bona fides of the
obligation and upon the credibility of petitioner and his
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