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In distinguishing debt from equity, the economic substance of the
transaction prevails over form. Byerlite Corp. v. Williams,
286 F.2d 285, 291 (6th Cir. 1960).
We now analyze and weigh all relevant facts to determine
whether petitioner and Mr. Mohney intended to create a debt, and
whether their intention comported with the economic reality of a
debtor-creditor relationship. Petitioner carries the burden of
establishing that the subject transfers generated debt rather
than equity. Rule 142(a).
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
note weighs toward debt. Estate of Mixon v. United States,
464 F.2d 394, 403 (5th Cir. 1972). The mere fact that a taxpayer
issues a note, however, is not dispositive of debt. An unsecured
note, with no payments made thereon until long after the due
date, weighs toward equity. Stinnett's Pontiac Serv. v.
Commissioner, 730 F.2d 634, 638 (11th Cir. 1984), affg. T.C.
Memo. 1982-314.
Although petitioner issued the Second Clarksville note to
Mr. Mohney, we give this fact little weight. The record shows
that the transfer of the subject properties to petitioner
occurred in 1977, yet the related deeds were not recorded until
sometime thereafter. We also find that Mr. Mohney's
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