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maturity date shows petitioner had no desire to protect his
interest as a creditor, suggesting that the transfer was equity.
In Ambassador Apartments. Inc., the taxpayers transferred assets
to a corporation in exchange for stock and a promissory note.
Id. at 239. The note required monthly payments of principal and
interest for 10 years and payment of the balance due after 10
years. Id. The taxpayer and corporation later agreed to relieve
the corporation of its obligation to pay principal and interest
for 5 years. Id. We held that this modification showed that the
transfer was equity. Id. at 246.
The facts here are different from those in Ambassador
Apartments. Petitioner and Swirl changed the maturity date:
There was no obligation to amortize principal. We believe that
petitioner was interested in protecting his rights as a creditor.
This factor suggests that the transfer was a loan.
d. Source of the Payments
If repayment of principal or interest is required only if
the corporation has earnings, the advance is more likely to be
equity. Estate of Mixon v. United States, 464 F.2d 394, 405 (5th
Cir. 1972); American Offshore, Inc. v. Commissioner, supra at
602.
The notes required Swirl to pay petitioner interest each
month and to pay the principal on April 1, 1988. The note did
not make repayment of principal or interest dependent upon Swirl
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