- 7 - determinable sum of money. Sec. 1.166-1(c), Income Tax Regs. This is in contrast to a contribution to capital or equity investment, which is not considered debt for purposes of section 166. Kean v. Commissioner, 91 T.C. 575, 594 (1988); sec. 1.166- 1(c), Income Tax Regs. Respondent determined that Mr. Kadlec’s advances to SLI constituted capital contributions as opposed to loans. Respondent's determination is presumed correct, and petitioners bear the burden of proving otherwise. Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933); Dixie Dairies Corp. v. Commissioner, 74 T.C. 476, 493 (1980). The characterization of advances to a corporation by a shareholder is a question of fact to be determined from all the facts and circumstances. Gilbert v. Commissioner, 262 F.2d 512, 513 (2d Cir. 1959), affg. T.C. Memo. 1958-8; Georgia-Pacific Corp. v. Commissioner, 63 T.C. 790, 795 (1975). Courts have considered the following nonexclusive list of factors in determining whether advances, such as those involved in the instant case, are loans or equity investments: (1) the intent of the parties; (2) the identity between creditors and shareholders; (3) the extent of participation in management by the holder of the instrument; (4) the ability of the corporation to obtain funds from outside sources; (5) the "thinness" of the capital structure in relation to debt; (6) the risk involved; (7) the formal indicia of the arrangement; (8) the relative position of the obligees as to other creditors regarding the payment of interest and principal; (9) the voting power of the holder of the instrument; (10) the provision of a fixed rate ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
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