- 17 -
Nor is there evidence of any security for the debt or of any
provision for interest on the debt.
However, the lack of these debt characteristics is not
determinative. Lack of formality may not necessarily negate the
presence of a loan when related parties transfer funds. See
Donisi v. Commissioner, T.C. Memo. 1967-62, affd. 405 F.2d 481
(6th Cir. 1968). Even if interest is not paid on a debt, a bona
fide debt may exist. Joseph Lupowitz Sons, Inc. v. Commissioner,
supra at 868; Gilbert v. Commissioner, supra; Shaken v.
Commissioner, 21 T.C. 785, 793 (1954).
c. Treatment on the Trusts' Books
The trusts did not treat the $82,763 as interest payments on
their books. This lack of treatment on the trusts' books is not
conclusive. When "the same persons occupy both sides of the
bargaining table, form does not necessarily correspond to the
intrinsic economic nature of the transaction, for the parties may
mold it at their will with no countervailing pull." Fin Hay
Realty Co. v. United States, supra at 697.
d. Repayments on the Loans
The estate made $82,763 of payments of interest on the
loans, by paying a portion of the margin interest charged on the
trusts' loan from E.F. Hutton. The handwritten notations on the
E.F. Hutton statements for April through August 1984 indicate
that the estate owed interest of a specified amount. The
notations correspond directly to the deposits made by the trusts
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