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the alleged original notes were created or identify the person
who created them. Stewart also testified that at least two of
the original notes had a 12-percent rate of interest. In that
regard, the reconstructed notes reflected 10 percent interest.
On this record, it would be difficult to find that notes were
executed at the time that petitioner advanced funds to UPE.
Considering the failure to advise the accountants of the
advances, failure to book interest income, and failure to book
the advances as loans, it is unlikely that petitioner went
through the formality of notes at the time the funds were
advanced to UPE. Even if we were able to find that such notes
contemporaneously existed, the substance of the financial
transactions, on this record, reflects that the advances were
equity and not loans.
Another important fact is that the alleged promissory notes
from UPE to petitioner were not secured by its tangible assets or
guaranteed by its shareholders. Petitioner contends that the
alleged notes were secured by UPE’s rights to payment under the
Formosa contracts. Accordingly, the possibility of “repayment”
would have depended solely upon UPE’s receipts from the Formosa
contracts and then only to the extent that creditors were paid
off and/or UPE had profits from which to repay petitioner. At
the time of the advances, the work on the Formosa contracts had
not yet been performed, and Formosa’s payments to UPE were
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