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out of dividend money. Hardman v. United States, 827 F.2d 1409,
1411-1412 (9th Cir. 1987); Bauer v. Commissioner, supra at 1368;
A. R. Lantz Co. v. United States, supra at 1333. These factors
help distinguish: (1) Shareholders who transfer money to
corporations in exchange for equity interests that are repayable
based on the corporations' performance, from (2) creditors who
transfer money to corporations in return for obligations that are
payable regardless of the corporations' performance. Bauer v.
Commissioner, supra at 1367; A. R. Lantz Co. v. United States,
supra at 1334.
The above-mentioned factors focus primarily on ascertaining
the intent of the parties to the transfer through their objective
and subjective expressions. Bauer v. Commissioner, supra at
1367; A. R. Lantz Co. v. United States, supra at 1333-1334;
Litton Bus. Sys., Inc. v. Commissioner, 61 T.C. 367, 377 (1973).
In passing on their intent, we ask ourselves: (1) Did they truly
intend to create a debt, (2) was their intention consistent with
the economic reality of creating a debtor-creditor relationship,
(3) did the transferor reasonably expect to be repaid, and
(4) would an unrelated lender have advanced money to the
transferee in the same amount and on the same terms. Litton Bus.
Sys., Inc. v. Commissioner, supra at 377. We look to the
substance of the transfer, rather than its form. Gregory v.
Helvering, 293 U.S. 465 (1935); Hardman v. United States, supra
at 1411. We apply special scrutiny in cases such as this one,
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