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sustain her determination mainly because some of the formalities
of debt were not present, we refuse to do so. We find that
petitioner's claim to the deduction was strongly supported by
their testimony.4 See, e.g., Diaz v. Commissioner, 58 T.C. 560,
564 (1972). We also find that this claim is adequately supported
by the 11 factors, our analysis of which is set forth below.
i. Name of certificate
We look to the name of the certificate evidencing purported
debt to determine the “debt’s” true label. The issuance of a
debt instrument such as a promissory note points toward debt.
The issuance of an equity instrument such as a stock certificate
points toward equity. Hardman v. United States, supra at 1412.
The mere fact that a taxpayer does not issue a formal debt
instrument to evidence a transfer of money will not preclude
classifying that transfer as debt. In such a case, the Court
must consider all relevant evidence to determine whether the lack
of a formal debt instrument is inconsistent with the taxpayer's
claim that the alleged debt is truly debt. See Estate of Mixon
v. United States, 464 F.2d 394, 403-404 (5th Cir. 1972); see also
American Offshore, Inc. v. Commissioner, 97 T.C. 579, 602 (1991).
The Court must also take into account the realities of the
4 In addition to the testimony of Mr. Roven and Ms. Martin,
petitioner relies on the testimony of the C.P.A., who was called
by respondent. Although we have some reservations about the
contents of the C.P.A.'s work papers, which are included in the
record, we find most of his testimony to be credible and
persuasive.
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