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The record further reflects that DF #1, during some of the
years in issue, also claimed interest deductions with respect to
certain notes it issued in connection with transactions that
might have been the subject of the Bales decision. These alleged
interest payments were “made” by the partnership purportedly
transferring back (at inflated values) “cattle” to the Hoyt
organization. For instance, a Hoyt organization payment summary
and a payment receipt reflect that, in early 1987, DF #1
transferred to the Hoyt organization 14 heifers having a stated
total value of $111,056 (which works out to an average stated
value per heifer of just under $8,000) and that the Hoyt
organization credited this $111,056 “payment” against three of DF
#1's promissory notes, including two notes that DF #1 issued,
respectively, in 1976 and 1977. The payment summary further
reflects that the Hoyt organization credited this $111,056
“payment” against the three notes, allocating $13,231 to interest
and $97,925 to principal.
We are aware that the DF #1 notes issued in connection with
the transactions involved in Bales were previously determined by
this Court to be valid recourse indebtedness. However, in the
instant cases, the Court does not believe DF #1 to be entitled to
interest deductions on those notes for the years in issue. As
indicated previously, petitioner’s collateral estoppel claim is
not properly before the Court. See supra note 39. Moreover, by
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