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drafted no earlier that June 30, 2000. Moreover, both the Paulan
and the Sidal minutes specify a meeting date (December 18, 1997)
on which the alleged loans (from Paulan to petitioners and from
petitioners to Sidal) were authorized that is more than 3 weeks
after the wire transfer payments actually occurred.
Thus, it is the form of the wire transfer payments and the
manner in which they were consistently recorded on both Paulan’s
and Sidal’s books that furnish the evidentiary support for
petitioners’ position that those payments constituted back-to-
back loans giving petitioners bases in Sidal to the extent
thereof. We find that that evidence is sufficient to sustain
petitioners’ position. Although we would normally be inclined to
view petitioners’ participation in the transactions, if they were
essentially conduits for transfers of funds from Paulan to Sidal,
as without independent legal significance, in this instance
petitioners’ involvement, at some personal inconvenience,17
represented a concrete manifestation of an intent to create debt
from Sidal to them and from them to Paulan.18 The
17 Petitioners decided to abandon the wire transfer
structure for subsequent payments from Paulan to Sidal as an
inconvenient (to them) interruption of the interentity flow of
funds.
18 As discussed supra, were we to view the same-day wire
transfers from Paulan to petitioners and from petitioners to
Sidal as without independent legal significance, we would
disregard those intermediate payments under the so-called step
transaction doctrine.
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