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The thrust of petitioner’s testimony is that he made loans
to virtual strangers over the course of 1999, through December
1999, pursuant to “promissory notes” that did not specify any
amounts due, in order to earn favorable interest. Petitioner
testified as follows:
in ‘97 and ‘98 and ‘99 I was actively involved in it
and when I found the market was going down I started
liquidating and fortunately I had the opportunity to
meet this group and I thought that rather than putting
my money in the bank making two percent or three
percent I had an opportunity that they would give me
six percent and I could therefore secure the fund for
myself.
Then later on if something panned out where they
went IPO or something else I might be able to have some
opportunity there. So I asked them to provide me a
promissory note which they did for ‘99 on the basis
that I would provide them the funds as they needed it
and as I had the available when I had already cashed
some of my stocks. * * *
Petitioner then claims that, in early 2000, he concluded that the
alleged “loans” were worthless.
Whether a bona fide debtor-creditor relationship exists is a
question of fact to be determined upon consideration of all of
the facts and circumstances. Fisher v. Commissioner, 54 T.C.
905, 909 (1970). Among the factors that are commonly considered
in deciding whether there was a reasonable expectation, belief,
and intention of repayment are: (1) Whether a note or other
evidence of indebtedness exists, Clark v. Commissioner, 18 T.C.
780, 783 (1952), affd. 205 F.2d 353 (2d Cir. 1953); (2) whether
interest is charged, id.; (3) whether there is a fixed schedule
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