- 19 - ii. Fixed maturity date The presence of a fixed maturity date points toward debt. The absence of a fixed maturity date usually points toward equity. Such an absence tends to show that repayment is more likely tied to the fortunes of a business. Hardman v. United States, 827 F.2d at 1413; American Offshore, Inc. v. Commissioner, 97 T.C. at 602. The fact that a fixed maturity date is absent from a case, however, does not necessarily mean that a purported debt is actually equity. In such a case, the Court must ascertain whether the lack of a fixed maturity date is explainable or otherwise negated by other evidence in the record. See Hardman v. United States, supra at 1413. Because petitioner did not issue notes to evidence the advances as debt, we do not find a written maturity date for the advances' repayment. We find, however, that the advances were repayable on demand. It is also relevant that Kenilworth had a prior history of borrowing money from petitioner for short periods of time, and of repaying timely these debts. Estate of Mixon v. United States, supra at 404. The same is true with respect to the fact that petitioner demanded that Kenilworth repay petitioner all debts (including the advances) due it after the Crash. Such a demand for repayment is evidence of a debtor-creditor relationship. Montgomery v. United States, 87 Ct. Cl. 218, 23 F. Supp. 130 (1938); see also Sattelmaier v. Commissioner, T.C. Memo. 1991-597.Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
Last modified: May 25, 2011