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4. Short Term Loans
Petitioners contend that amounts Resyn paid for petitioners'
personal expenses which respondent contends were constructive
dividends were loans to petitioner from Resyn. Courts apply
special scrutiny to the characterization by corporations that
advances made by them to their sole stockholders are loans.
Turner v. Commissioner, 812 F.2d 650, 654 (11th Cir. 1987), affg.
T.C. Memo. 1985-159. Self-serving statements of intent, absent
objective economic indicia of debt, are of little value to sole
stockholders in unreported income cases. Id. at 654. Written
evidence of debt, such as consistent bookkeeping and consistent
financial reporting, may be little more than additional
declarations of intent. Id. The form of the transaction and the
labels used by the parties have less significance when the
corporation is closely held because the parties can mold the
transaction at their will. Fin Hay Realty Co. v. United States,
398 F.2d 694, 697 (3d Cir. 1968); Calumet Indus., Inc. v.
Commissioner, 95 T.C. 257, 286 (1990).
In deciding whether a bona fide loan exists, we consider:
(a) Whether there is a note or other evidence of indebtedness and
whether the lender charges interest, Clark v. Commissioner, 18
T.C. 780, 783 (1952), affd. 205 F.2d 353 (2d Cir. 1953); (b)
whether there is a fixed repayment schedule, id. at 783;
Frierdich v. Commissioner, T.C. Memo. 1989-393, affd. 925 F.2d
180 (7th Cir. 1991); (c) whether the lender requests any security
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