- 26 -
of loans originally made to the individual shareholder in his or
her individual capacity. See Spencer v. Commissioner, supra at
84-85. Indeed, the Morrises did not even personally guarantee
the loans in question.21 Although Briggs, together with Daniell,
personally guaranteed the loans, he made no economic outlay that
entitled him to add to his basis in his Towers Development stock.
Moreover, petitioners have not treated the loans in question as
personal loans by them to Towers Development. They have not
reported Towers Development’s interest payments as constructive
dividends, nor have they claimed any interest deductions with
respect to the loans. See id. at 86.
In sum, unlike Selfe v. Commissioner, 778 F.2d at 769, the
instant case does not present one of the “unusual sets of facts”
that would lead us to believe that the substance of the
transactions in question was unfaithful to their form. Sleiman
v. Commissioner, 187 F.3d at 1359. On the basis of all the
evidence in the record, we conclude and hold that AMI looked to
Towers Development as the primary obligor on the loans in
21 In fact, AMI mandated that Mr. Morris’ name be removed
from the loan documents because he had a poor credit history.
Imperial Pines Development Corp., which Mrs. Morris owned with
Briggs, pledged property to AMI to secure additional financing
for Towers Development. At some unspecified date, however, this
security was released when Towers Development repaid the loan.
There is no evidence that AMI looked to Mrs. Morris individually
for repayment.
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