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However, an instrument will be given little weight when the form
of the instrument fails to correspond with the substance of the
transaction. Provost v. Commissioner, T.C. Memo. 2000-177.
Petitioner did not produce a note or other instrument
indicating he intended to repay TPPL the $249,193 it transferred
to SSI in 1998 for the development of the Rivercliff property or
repay NCPL for the total of $92,250 it transferred to petitioner
for the Rivercliff property’s farm operating expenses in 1998,
2001, and 2002.
However, petitioner asserts that the January 25, 1999, loan
agreement and the July 31, 2001, promissory note prove he and NCPL
established a debtor-creditor relationship with respect to the
funds NCPL wire transferred to SSI for the development of the
Rivercliff property in 1999, 2000, and 2001.22
The record reflects that neither petitioner nor NCPL adhered
to the terms of the loan agreement or the promissory note: (1)
Petitioner did not make a payment by January 25, 2004, as required
under the loan agreement; (2) petitioner did not make the $64,237
payment due on November 30, 2001, or the $254,949 payments due on
November 30 each year thereafter as required under the promissory
note; (3) NCPL did not attempt to collect the full amount owing or
22 The documentation created during the period of the
divorce proceedings from June 1, 2000, to Aug. 1, 2001, is given
little weight. It is obvious that petitioner was seeking by
means of preparation of documents and other manipulations to
limit his financial exposure in the divorce case.
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