- 63 -
Therefore, petitioner’s transfer of the Rivercliff property to RFI
in June 30, 2005, was not a bona fide repayment. See Commissioner
v. Makransky, supra at 600-601.
This factor indicates the parties did not intend to establish
a debtor-creditor relationship at the time the funds were
advanced.
7. Whether the Parties Conducted Themselves As If the
Transaction Were a Loan
The conduct of the parties may indicate the existence of a
loan. Baird v. Commissioner, 25 T.C. 387, 395 (1955); Teymourian
v. Commissioner, T.C. Memo. 2005-232; Morrison v. Commissioner,
supra.
Petitioner produced no evidence showing TPPL and petitioner
conducted themselves in a manner indicating that TPPL’s transfer
of $249,143 to SSI in 1998 was a loan. Petitioner also failed to
produce evidence showing NCPL and petitioner conducted themselves
in a manner indicating the total of $92,250 NCPL transferred to
petitioner for the Rivercliff property’s farm operating expenses
in 1998, 2001, and 2002 was a loan.
Although petitioner executed a loan agreement, a promissory
note, and a trust deed indicating the funds transferred to SSI for
the development of the Rivercliff property in 1999, 2000, and 2001
were a loan, neither party abided by the terms of the loan
agreement, the promissory note, or the trust deed.
Page: Previous 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 Next
Last modified: March 27, 2008