AMW Investments, Inc. - Page 20

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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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Last modified: May 25, 2011