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intent that the loan originate from GITIC. Petitioner asserts
that the form of the transaction--that petitioner borrowed $2
million from GXE and paid interest to GXE on account of that
loan--should be disregarded in favor of the true substance of the
transaction. Accordingly, petitioner would recast the GXE loan
transaction to reflect that petitioner borrowed an additional $2
million from GITIC, regardless of the fact that GXE signed the
loan agreement, distributed the net loan proceeds, and received
the interest payments.
As a general rule, a taxpayer is bound by the form of the
transaction that the taxpayer has chosen. Framatome Connectors
USA, Inc. v. Commissioner, 118 T.C. 32, 47 (2002), affd. 108 Fed.
Appx. 683 (2d Cir. 2004). A taxpayer may argue that the
substance of the transaction should prevail over its form only in
limited circumstances “where his tax reporting and actions show
an honest and consistent respect for the substance of a
transaction.” Estate of Weinert v. Commissioner, 294 F.2d 750,
755 (5th Cir. 1961), revg. and remanding 31 T.C. 918 (1959). The
taxpayer “must provide objective evidence that the substance of
the transaction was in accord with the position argued by * * *
[the taxpayer] rather than the form set forth by all the relevant
documents.” Groetzinger v. Commissioner, 87 T.C. 533, 541
(1986); see also Commissioner v. Natl. Alfalfa Dehydrating &
Milling Co., 417 U.S. 134, 149 (1974) (“while a taxpayer is free
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