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the funds were transferred, there was no intent to repay the
advances because there was no fixed time and plan for repayment;
no maturity date; no ceiling placed on the advances; no
promissory notes; and the documentation provided at audit
consisted of backdated corporate minutes, a backdated security
agreement, backdated promissory notes, and changed accounting
records.
Georgiou further asserts that he is entitled to a $76,605
business interest deduction in relation to the advances.
Respondent contends that there is no allowable interest deduction
because the advances are not loans.
Whether advances from a corporation to its shareholder
constitute bona fide loans is a factual question and depends on
the existence, at the time the advances occurred, of an intent on
the shareholder's part to repay the advances and an intent on the
corporation's part to enforce the obligations. Berthold v.
Commissioner, 404 F.2d 119, 122 (6th Cir. 1968), affg. T.C. Memo.
1967-102. As the state of a taxpayer's mind at a given time in
the past is not directly ascertainable, we must consider
objective evidence. See Baird v. Commissioner, T.C. Memo. 1982-
220. The issue thus turns upon all of the circumstances
surrounding the transactions. Wiese v. Commissioner, 93 F.2d 921
(8th Cir. 1938), affg. 35 B.T.A. 701 (1937). Where the
shareholder receiving the advances controls the corporation,
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