- 50 -
Dr. Gant testified that he did not have any records showing
loans to petitioner, that he did not receive a note from
petitioner, and that all records were maintained by Mr. Miles.
Petitioner did not submit any records to substantiate his and Dr.
Gant’s testimony that loans were made, and none of the records
from Mr. Miles’s law firm, including the ledger cards, show any
loans or their amounts.
At trial, petitioner and Dr. Gant testified that proceeds
from the sales of East Lake Vista were deposited into Mr. Miles’s
law firm’s trust account and that petitioner would then “borrow”
those proceeds for his own purposes. However, it is not at all
clear from Dr. Gant’s testimony what he considers to be a
“loan”.32 It appears to us that Dr. Gant understood that upon
the receipt of any sale proceeds from East Lake Vista, and after
debt service on the note to Reba Smith, that he was to be repaid
his initial $125,000, but that petitioner instead borrowed those
proceeds, and that Dr. Gant has never been paid back his
$125,000. However, those facts do not establish a loan, and, in
any event, they are not inconsistent with petitioner owning a 50-
percent interest in East Lake Vista. There is no evidence in
this case that petitioner had an obligation to repay the amounts
32The “hallmarks” of a loan are: (1) Consensual recognition
between the borrower and the lender of the existence of the loan,
i.e., the obligation to repay; and (2) bona fide intent on the
part of the borrower to repay the funds advanced. Inv. Research
Associates, Ltd. v. Commissioner, T.C. Memo. 1999-407.
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