Deja Vu, Inc. - Page 12

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               vi.  Identity of Interest                                              
               Advances made by stockholders in proportion to their                   
          respective stock ownership weighs 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.                
          Roth Steel Tube Co. v. Commissioner, supra at 630; Estate of                
          Mixon v. United States, 464 F.2d 394, 409 (1972); American                  
          Offshore, Inc. v. Commissioner, supra at 604.  Family solidarity            
          and other legal or economic affiliations may neutralize the                 
          significance of any disproportionate ratio.  See C. M. Gooch                
          Lumber Sales Co. v. Commissioner, 49 T.C. 649 (1968).                       
               Although petitioner did not have a direct stock interest in            
          Adult Fun, petitioner and Adult Fun shared a legal and economic             
          relationship as parts of Mr. Mohney's larger enterprise.  Indeed,           
          petitioner's president testified that all of petitioner’s                   
          executive decisions were made in consultation with Mr. Mohney.              
               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, 742 F.2d 1311, 1317 (11th Cir. 1984);                
          Raymond v. United States, 511 F.2d 185, 191 (6th Cir. 1975);                
          Austin Village, Inc. v. United States, supra at 745.                        

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