Deja Vu, Inc. - Page 9

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               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. Inc. v. Commissioner, 730 F.2d 634, 638 (11th Cir.            
          1984), affg. T.C. Memo. 1982-314.                                           
               Although Adult Fun issued the Notes with respect to the                
          advances, and the Notes bore a stated interest rate of                      
          10 percent, we give these facts little weight.  The Notes were              
          unsecured, and Adult Fun did not repay the amounts reflected                
          therein according to the Notes’ terms.  Petitioner focuses on the           
          fact that it recorded debt on its books in connection with the              
          transfer.  We are not impressed.  Under the facts herein,                   
          petitioner’s accounting entry lends little (if any) support for a           
          finding of debt.  See Raymond v. United States, supra at 185.               
          This is especially so, given the fact that the parties were                 
          dealing at other than arm's length.                                         
               This factor is neutral.                                                
               ii.   Fixed Maturity Date                                              
               The presence of a fixed maturity date weighs toward debt,              
          but is not dispositive of a debtor-creditor relationship.                   

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