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Petitioner's ability to make payments on the subject
properties depended primarily (if not solely) on the rental
income from the properties. Immediate payment of the purported
debt also does not seem to have been available from petitioner's
existing assets which consisted primarily (if not entirely) of
the subject properties.
This factor weighs toward equity.
v. Capitalization
Thin or inadequate capitalization weighs toward equity.
Roth Steel Tube Co. v. Commissioner, 800 F.2d at 632.
The record indicates that petitioner did not have meaningful
equity either before or at the time Mr. Mohney transferred the
subject properties to it.
This factor weighs toward equity.
vi. Identity of Interest
Advances made by stockholders in proportion to their
respective stock ownership weigh toward equity. A sharply
disproportionate ratio between a stockholder’s ownership
percentage in the corporation and the debt owing to the
stockholder by the corporation generally weighs toward debt.
Id. at 630; Estate of Mixon v. United States, supra at 409;
American Offshore, Inc. v. Commissioner, supra at 604.
Mr. Mohney owned the subject properties immediately before their
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