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Sys., Inc. v. Commissioner, 61 T.C. 367, 376-377 (1973);
Roschuni v. Commissioner, 29 T.C. 1193, 1202 (1958), affd. 271
F.2d 267 (5th Cir. 1959); Georgiou v. Commissioner, T.C. Memo.
1995-546; Wood Preserving Corp. v. United States, 233 F. Supp.
600, 605 (D. Md. 1964), affd. 347 F.2d 117 (4th Cir. 1965). The
factors are simply objective criteria helpful to the court in
analyzing all of the relevant facts and circumstances.
Petitioners bear the burden of proving that a bona fide debt was
created. Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933).
We will examine the four criteria in turn.
a. Existence of a Debt Instrument
A debt instrument is defined as a "written, unconditional
promise to pay on demand or on a specified date a sum certain at
a fixed rate of interest". United States v. Uneco, Inc., supra
at 1210. The parties have stipulated that there are no
promissory notes reflecting any debt due from the estate to the
trusts. A valid loan may exist even where there is no formal
debt instrument. Joseph Lupowitz Sons, Inc. v. Commissioner,
497 F.2d 862, 867-868 (3d Cir. 1974), affg. T.C. Memo. 1972-238;
Gilbert v. Commissioner, 74 T.C. 60, 66 (1980); American
Processing & Sales Co. v. United States, 78 Ct. Cl. 353, 371 F.2d
842 (1967). Formal documentation is not controlling. Litton
Bus. Sys., Inc. v. Commissioner, supra at 376-377. This is
especially true in the case of related parties. American
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