American Underwriters, Inc. - Page 21

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               iv.  Right to enforce payment of interest and principal                
               A definite obligation to enforce the payment of principal              
          and interest is evidence of debt.  Hardman v. United States,                
          supra at 1413; American Offshore, Inc. v. Commissioner, supra at            
          603.  The absence of security for the repayment of purported debt           
          generally points toward equity.  Roth Steel Tube Co. v.                     
          Commissioner, supra at 632; In re Lane, supra at 1317.                      
               We find that petitioner could enforce Kenilworth's repayment           
          of the advances.  Although we do not also find that petitioner              
          could enforce the payment of interest, we give this fact little             
          regard.  We believe that Mr. Roven's credible testimony                     
          adequately explains the lack of an interest provision from which            
          petitioner could seek enforcement.                                          
               We also are untroubled by the fact that petitioner did not             
          receive any type of security for the advances.  Mr. Roven                   
          testified that he did not require security because Kenilworth and           
          petitioner were commonly owned.  Moreover, Kenilworth had a solid           
          history of repaying petitioner timely and expeditiously.  We do             
          not believe that the absence of security under the facts at hand            
          precludes a finding of debt on this factor.                                 
               This factor is neutral, and we give it no weight.                      
               v.  Participation and management                                       
               If a transferor's right to participate in the management of            
          the transferee corporation increases as a result of the transfer            
          of funds, then the transferor may be a shareholder of the                   




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