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reclassifying the loans as back-to-back loans through the
taxpayer. In both cases, we found that the system was indicative
of the contemporaneous treatment of the transactions as back-to-
back loans through the taxpayer. In those cases, however, the
adjusting entries were consistent with an established course of
conduct whereby the payor corporation routinely made payments on
behalf of the taxpayer shareholder. As noted supra, petitioners
have established no such course of conduct for Paulan.
Moreover, in each of Yates, and Culnen, the taxpayer-
shareholder was intimately involved in recording the intercompany
advances to the S corporation as giving rise to payables from the
S corporation to him. In Yates, it was the taxpayer who directed
his accountant to make intercorporate funds transfers and, by
yearend, to record those transfers either as distributions to him
followed by capital contributions to the payee S corporation or
as back-to-back loans to the S corporation through him. In
Culnen, the taxpayer’s regular accountant testified that it was
the taxpayer who routinely, over a 20-year period, directed the
bookkeeper for the payor corporation to have that corporation
write checks on his behalf and charge the amounts to his loan
account with the corporation; and the taxpayer’s outside
accountant testified that she made the adjusting entries
classifying the payor corporation’s payments to the loss S
corporation as back-to-back loans through the taxpayer on the
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