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out by the Supreme Court in Commissioner v. Indianapolis Power &
Light Co., 493 U.S. 203, 209 (1990), the borrower frequently has
unfettered use of the proceeds of a loan. The Supreme Court
explained that the key to determining whether a taxpayer enjoys
“complete dominion” over a given sum is not whether the taxpayer
has unconstrained use of the funds during some period, but
whether the taxpayer “has some guarantee that he will be allowed
to keep the money.” Id. at 210. In evaluating whether a
taxpayer enjoys complete dominion, we look to “the parties’
rights and obligations at the time the payments are made.” Id.
at 211. Here, petitioner’s dominion over the Amoco payment is
far less complete than is ordinarily the case in an
advance-payment situation. At the time Amoco made the advance,
petitioner had no guarantee that it would be allowed to keep any
portion of the payment. Highland Farms, Inc. v. Commissioner,
106 T.C. 237, 250-252 (1996).
Respondent asserts that the advance was not a loan because
formalities for creating a loan were not followed, the mortgage
was subordinated to an unknown debt, and Amoco did not consider
petitioner’s financial condition before making the advance.
Specifically, respondent asserts that the fact that Mr.
Zimmerman’s signature on the note does not indicate that he
signed as petitioner’s president means that he signed the note in
his individual capacity, making him the borrower. We disagree.
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