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capital contributions and the taxpayer was a “classic capital
investor”. Id. at 288.
Like the alleged debt in Calumet Indus., the $200,000
advance was made at the risk of the Corbin project, and
petitioner expected to be repaid from the future profits
generated by the sale of the properties. Petitioner also
conceded on brief that Mr. Magness was unable to secure
additional loans from outside lenders. Although "the mere fact
that a loan could not be obtained from an unrelated source does
not preclude the existence of a bona fide loan”, Jack Daniel
Distillery v. United States, 379 F.2d at 584, evidence that Mr.
Magness could not obtain additional loans from outside lenders is
an indication petitioner's advance was an equity investment,
especially in light of the fact that repayment was conditioned
upon the success of the Corbin project. When the terms of the
advance by petitioner are considered, it is almost inconceivable
an outside lender would have advanced Mr. Magness money on
similar terms. This factor favors respondent’s position.
The evidence supports respondent’s contention that the
advance more closely resembled that of an investment in a joint
venture between petitioner and Mr. Magness. Upon consideration
of the above factors, we hold that petitioner’s advance was not a
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