- 21 - transfer, and he effectively owned 100 percent of petitioner’s equity at the time of the transfer. This factor weighs toward equity. vii. Presence or Absence of Security The absence of security for purported debt weighs toward equity. Roth Steel Tube Co. v. Commissioner, supra at 632; Lane v. United States, supra at 1317; Raymond v. United States, 511 F.2d at 191; Austin Village, Inc. v. United States, 432 F.2d at 745. Mr. Mohney did not receive security for his transfer of the subject properties to petitioner. This factor weighs toward equity. viii. Inability to Obtain Financing The question of whether a transferee could have obtained comparable financing is relevant in measuring the economic reality of a transfer. Estate of Mixon v. United States, 464 F.2d at 410; Nassau Lens Co. v. Commissioner, 308 F.2d 39, 47 (2d Cir. 1962), remanding 35 T.C. 268 (1960). Evidence that the taxpayer could not obtain loans from independent sources weighs toward equity. Calumet Indus., Inc. v. Commissioner, 95 T.C. 257, 287 (1990). We look to whether the terms of the purported debt were a "patent distortion of what would normally have been available" to the debtor in an arm’s-length transaction. SeePage: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
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