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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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