- 13 -
The four 1990 advances were each evidenced by promissory
notes,11 as was the December 2, 1993, advance of $10,483. All
the notes were unsecured. Apart from the $5,000 repayment made
in late 1993, which was not allocated specifically to any of the
notes, there were no repayments. When petitioner made the
advances, either he singly, or else he and Philip together, owned
all the interest in Gandy’s, either directly or through their
wholly owned corporations PASEL or Merchant Capital, which was
also underwriter of the Gandy’s bonds.12 Throughout this period,
Philip was president of Gandy’s. Where a transaction involves a
closely held corporation, the form and labels used may signify
little, because the parties can mold the transaction to their
will. See Anchor Natl. Life Ins. Co. v. Commissioner, 93 T.C.
382, 407 (1989). Accordingly, we assign little weight to the
labeling of certain of the advances as notes.
2. The Presence or Absence of a Fixed Maturity Date
The presence of a fixed maturity date is indicative of debt
but is not dispositive. See American Offshore, Inc. v.
11 One of these notes indicates on its face that it was made
some 6 months after petitioner had wired the principal amount to
Gandy’s, suggesting the absence of a “businesslike, arm’s length
transaction.” Estate of Mixon v. United States, 464 F.2d 394,
403 (5th Cir. 1972).
12 The record is unclear about the exact configuration over
time of ownership interests in Gandy’s among petitioner, Philip,
and their corporations. Petitioners state in their reply brief
that petitioner “eventually held all the [Gandy’s] stock”.
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