American Underwriters, Inc. - Page 14

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          Offshore, Inc. v. Commissioner, 97 T.C. 579, 602 (1991).  Whether           
          a transfer creates a debt is a question of fact, for which the              
          taxpayer bears the burden of proof.  Rule 142(a); Welch v.                  
          Helvering, 290 U.S. 111, 115 (1933); Bauer v. Commissioner,                 
          748 F.2d 1365, 1368 (9th Cir. 1984), revg. T.C. Memo. 1983-120;             
          A. R. Lantz Co. v. United States, 424 F.2d 1330, 1334 (9th Cir.             
          1970); Crown v. Commissioner, 77 T.C. 582, 598 (1981); Gilbert v.           
          Commissioner, 74 T.C. 60, 64 (1980).  The key to this factual               
          determination turns primarily on the taxpayer's actual intent, as           
          shown by the circumstances and condition of the transfer.                   
          Bauer v. Commissioner, supra at 1367-1368; A. R. Lantz Co. v.               
          Commissioner, supra at 1333.  In passing on this intent, the                
          Court of Appeals for the Ninth Circuit, to which appeal in this             
          case lies, has considered 11 factors.  These factors, which are             
          not equally significant and none of which is controlling by                 
          itself, are:  (1) The names given to the certificates evidencing            
          the indebtedness, (2) the presence or absence of a fixed maturity           
          date, (3) the source of payments, (4) the right to enforce the              
          payment of principal and interest, (5) participation in                     
          management as a result of the advances, (6) a status of the                 
          advances equal to or inferior to that of regular corporate                  
          creditors, (7) the intent of the parties, (8) the identity of               
          interest between creditor and stockholder, (9) a thin or adequate           
          capitalization, (10) the ability of the corporation to obtain               
          loans from outside sources, and (11) the payment of interest only           




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