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principal accountant, Eagleson. Petitioner concedes in testimony
that the Note was not executed until June of 1992. However, the
Note on its face is misleading as to the execution date in two
key respects. First, although there is no date next to
petitioner's signature, the date July 2, 1990 (the date of the
transfer of the Ranch to petitioner), appears at the top of the
Note. Second, the text of the Note states that payment is
secured by the tract of land "more fully described in the Deed
executed on this date, July 2, 1990" (emphasis added); this
implies that the Note was executed on the same date as the deed.
The only other date that appears on the Note is the due date of
the first payment under the Note, July 2, 1992. It is true that
Eagleson disclosed the actual date the Note was executed after
probing by Agent Sohrt, but the fact remains that the Note was
misleading on its face. In addition, at the time the Note was
executed, petitioner no longer owned the property recited as
security in the Note, which creates another misleading element.
The discrepancies surrounding the date of execution and the
Note's security cast doubt upon the bona fides of the
indebtedness that the Note purported to memorialize.
Based on the foregoing factors, we conclude that there was
no bona fide indebtedness between petitioner and Paz.
Accordingly, we uphold respondent's determination that the
transfer of the Ranch to petitioner was a dividend to him.
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