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transpired between petitioner and Northwest during the fiscal
year ended June 30, 1989. Respondent looks at the events during
this period, and particularly the advances made by petitioner to
Northwest, as being either loans which created debt or
contributions to capital. Respondent views petitioner as a
stockholder of Northwest and analyzes the advances by petitioner
to Northwest under the traditional debt-equity considerations.
See Estate of Mixon v. United States, 464 F.2d 394, 402 (5th Cir.
1972) (applying 13 debt-equity factors). Using that approach,
respondent concludes that no bona fide debtor-creditor
relationship between petitioner and Northwest was created after
October 10, 1988, because the advances and extensions of credit
by petitioner to Northwest after that date were worthless when
made. See Putnam v. Commissioner, 352 U.S. 82, 88 (1956)
(taxpayer who voluntarily buys a debt with knowledge that he will
not be paid is considered not to have acquired a debt).
Petitioner, on the other hand, views the transactions during
this period as an attempt to bail out and salvage a dealership
that was important to petitioner. Northwest covered a territory
which had substantial potential. Prior to the years in issue,
Northwest had been profitable and responsible for many sales of
petitioner's motor coaches. Petitioner wanted to keep Northwest
as a healthy, profitable dealership because of its own self-
interest in selling motor coaches. As the scenario further
developed and the bankruptcy of Northwest became a real
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