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Electric & Neon, Inc. v. Commissioner, 56 T.C. 1324, 1339 (1971),
affd. without published opinion 496 F.2d 876 (5th Cir. 1974);
Haber v. Commissioner, supra at 266. Because both Simco
shareholders acquiesced in the treatment of the proceeds from the
latter half of 1991 as a loan repayment, we believe special
scrutiny is appropriate in the instant cases.
Based on all the facts and circumstances, we find that
petitioners have failed to prove that John’s retention of the
proceeds from scrap metal sales during the period July 1 through
December 31, 1991, was intended to be the repayment of a loan.
First, we note the general confusion on the part of petitioners
about who lent what to whom. Petitioners executed stipulations
in these cases stating that Simco characterized the scrap metal
proceeds received during its fiscal year ended June 30, 1992 as a
loan from Simco to John. In his opening statement at trial,
petitioners’ counsel argued that these proceeds “should be
considered a loan to Mr. McLean”. However, on brief, for the
first time, petitioners take a different position; namely, that
these proceeds constituted Simco’s repayment of a loan to it by
John. This mutation in petitioners’ position is emblematic of
the confused state of the record regarding the purported loan
transaction. Although the record contains copies of certain
demand notes obligating Simco to pay John (and Neal) various
amounts, the notes themselves are ambiguous as to their date of
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