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contingent on UPE’s progress. Regarding the actual contracts,
UPE’s attorney wrote the following in a letter to petitioner’s
accountant: “At the time the [Formosa] contracts were entered,
UPE did not seek legal counsel and the contracts were very
onerous to UPE and favorable to Formosa.” When testifying about
which of the Formosa contracts secured the alleged promissory
notes, Stewart could not identify any of them.
As shown by their actions, the parties intended the funds
advanced to be an investment in UPE. For these reasons, we find
that petitioner made an equity investment in UPE and, therefore,
when UPE failed to repay, petitioner suffered a capital loss.
See Kean v. Commissioner, 91 T.C. 575, 594-600 (1988).
We have considered all other arguments advanced by the
parties, and to the extent that we have not addressed these
arguments, we consider them irrelevant, moot, or without merit.
To reflect the foregoing,
Decision will be entered for
respondent.
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