Deja Vu, Inc. - Page 10

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          American Offshore, Inc. v. Commissioner, 97 T.C. 579, 602 (1991).           
          The presence of a fixed maturity date may be offset by other                
          facts in the record.                                                        
               The Notes had a set repayment schedule.  The presence of               
          this schedule, however, is downplayed by the fact that Adult Fun            
          made no payments in accordance therewith.  Petitioner also did              
          not pursue collection or inquire as to payment until Adult Fun              
          was defunct.  The facts at hand indicate that a debtor-creditor             
          relationship was not contemplated by petitioner or Adult Fun.               
          The actions of the parties to the Notes speak louder than words.            
          Their actions are uncharacteristic of a bona fide debtor-creditor           
          relationship.                                                               
               This factor weighs toward equity.                                      
               iii.   Interest Rate and Payments                                      
               The presence of a fixed rate of interest and actual interest           
          payments weigh toward debt.  The absence of payments in                     
          accordance with the terms of a debt instrument weighs toward                
          equity.  American Offshore, Inc. v. Commissioner, supra at 605.             
               Although the notes bore an interest rate of 10 percent,                
          Adult Fun made no principal or interest payments to petitioner              
          (ignoring, for the moment, the transfer of the leasehold                    
          improvements).  The record also indicates that petitioner took no           
          meaningful steps to enforce any amounts that were due under the             
          terms of the Notes.                                                         
               This factor weighs toward equity.                                      




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