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Petitioners argue that we should ignore the form of the
loans and rely on the economic substance in deciding whether the
loans were actually made to petitioners. We find that the form
and substance of the transaction was a loan from the bank to
Family Motels. The proceeds of the loan were to be used to
purchase the motels on behalf of the corporation. Petitioners
submitted no evidence that they were free to dispose of the
proceeds of the loans as they wished. Nor were the payments on
the loans reported as constructive dividends in the corporation's
income tax returns or on petitioners' income tax returns during
the years in issue. Family Motels made all of the loan payments
to the bank and deducted the interest paid on the loans. At
trial, Mr. Hafiz stated that he occasionally made payments on the
loans at issue. This, however, is contrary to the stipulation of
facts. A party is not permitted to contradict a stipulation in
whole or in part, except in the interest of justice. Rule 91(e);
Stamos v. Commissioner, 87 T.C. 1451, 1454 (1986). Petitioners
have offered no evidence other than Mr. Hafiz's assertions at
trial that any payments were made by Mr. Hafiz. We deem the
prior stipulation to be binding. Petitioners are not entitled to
increase their bases in their stock by the amount of the loans.
Nor can petitioners increase their adjusted bases by a
portion of the loans. Absent an actual disbursement on the
indebtedness, shareholders cannot augment their bases in
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