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corporation in order to purchase capital assets weighs toward
equity. Roth Steel Tube Co. v. Commissioner, supra at 632;
Stinnett's Pontiac Serv. v. Commissioner, supra at 640;
Raymond v. United States, supra at 191.
The subject properties were petitioner’s initial and primary
assets, and the purported notes represented a long-term
commitment that was payable mainly from the future rental income
from the properties. We also find relevant that Mr. Mohney was
willing to go unpaid for many years so that petitioner could
continue to enjoy the advantage of uninterrupted ownership of the
properties.
This factor weighs toward equity.
xi. Presence or Absence of a Sinking Fund
The failure to establish a sinking fund for repayment weighs
toward equity. Roth Steel Tube Co. v. Commissioner, supra at
632; Lane v. United States, 742 F.2d at 1317; Raymond v. United
States, supra at 191; Austin Village, Inc. v. United States,
supra at 745.
The record does not indicate that petitioner established a
sinking fund for the repayment of the purported notes. To the
contrary, it appears that repayment was to come solely from
petitioner's earnings.
This factor weighs toward equity.
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