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The determination of whether an advance was made with such an
expectation, belief, and intention depends on all of the facts
and circumstances, and generally no one fact is determinative.
John Kelly Co. v. Commissioner, 326 U.S. 521, 526 (1946). Facts
generally considered when making this determination are: (1)
Whether there was a note or other evidence of indebtedness; (2)
whether interest was charged; (3) whether there was a fixed
schedule for repayments; (4) whether any security or collateral
was requested; (5) whether there was a written loan agreement;
(6) whether a demand for repayment was made; (7) whether the
parties' records, if any, reflected the transaction as a loan;
(8) whether any repayments were made; and (9) whether the
borrower was solvent at the time of the loan. See Clark v.
Commissioner, 18 T.C. 780, 783 (1952), affd. 205 F.2d 353 (2d
Cir. 1953). The key factor is whether the parties actually
intended and regarded the transaction as a loan. Estate of Van
Anda v. Commissioner, 12 T.C. 1158, 1162 (1949), affd. per curiam
192 F.2d 391 (2d Cir. 1951). The burden is on petitioner to
establish the existence of a bona fide loan.
Petitioner asserts that Mr. Kluzak borrowed $120,000 from
him in the early eighties and subsequently made payments of both
principal and interest. In 1986 the parties renegotiated the
loan by Mr. Kluzak writing a promissory note to petitioner in the
amount of $70,000.
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