Joseph Nachman - Page 13

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                  Respondent concedes that petitioner's transfer of $350,000                           
            to Swirl has all the formal indicia of a loan; e.g., Swirl gave                            
            two promissory notes that provided for the payment of interest in                          
            exchange for the transfer; Swirl treated the transfer as a loan                            
            on its financial statements and tax return; and petitioner                                 
            reported Swirl's payments as interest income on his tax returns.                           
            This factor suggests that the transfer was a loan.                                         
                        b.    Whether the Party Providing the Funds Can                                
                              Enforce Payment                                                          
                  A definite obligation to repay an advance suggests that it                           
            is a loan.  American Offshore, Inc. v. Commissioner, supra at                              
            603.  Petitioner had the right to enforce payments on the notes.                           
            If any payment was past due, petitioner could accelerate the                               
            payments due on the notes and collect those amounts and any                                
            remaining principal.  This factor suggests that the transfer was                           
            a loan.                                                                                    
                        c.    Whether There Is a Fixed Maturity Date                                   
                  The absence of a fixed maturity date suggests that a                                 
            transfer is equity.  American Offshore, Inc. v. Commissioner,                              
            supra at 602.  Swirl’s promissory notes included a fixed maturity                          
            date.  However, respondent points out petitioner agreed to delay                           
            the maturity date of the notes from April 1 to September 15,                               
            1988, and then to October 15, 1988.  Respondent cites Ambassador                           
            Apartments, Inc. v. Commissioner, 50 T.C. 236 (1968), affd. 406                            
            F.2d 288 (2d Cir. 1969) for the proposition that the delay in the                          





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