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or merely a loan with a security interest focuses on the intent
of the parties and not the form of the transaction." Redic v.
Gary H. Watts Realty Co., 762 F.2d 1181, 1185 (4th Cir. 1985)
(citing O'Briant v. Lee, 214 N.C. 723, 200 S.E. 865 (1939)). The
intention to create a mortgage must be established, not by simple
declaration of the parties, but by proof of the facts and
circumstances outside the deed which are inconsistent with an
absolute purchase. Redic v. Gary H. Watts Realty Co., supra at
1186; O'Briant v. Lee, 214 N.C. at 731, 200 S.E. at 870.
The North Carolina Supreme Court has identified six factors
to be considered in determining whether a transaction is a sale
or a loan:
(1) whether there was a debtor-creditor relationship
created at the time of the transaction * * *; (2)
whether the "grantor" remains in possession or whether
the grantee takes immediate possession of the property
* * *; (3) whether the "grantor" was under distress and
hard-pressed for money at the time of the transaction
* * *; (4) whether the transaction originated out of an
application for a loan * * *; (5) whether the purported
sale price is less than the net worth of the property
* * *; and (6) whether the "grantor" was obligated to
exercise the "option to repurchase." * * *
Redic v. Gary H. Watts Realty Co., supra at 1186 (citations
omitted).
In deciding whether a transaction constitutes a sale for tax
purposes, this Court considers whether the burdens and benefits
of ownership have passed to the purported purchaser; this is a
question of fact to be ascertained from the intentions of the
parties as evidenced by the written agreements read in the light
of the attending facts and circumstances. Grodt & McKay Realty,
Inc. v. Commissioner, 77 T.C. 1221, 1237 (1981). Factors
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