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Offshore, Inc. v. Commissioner, 97 T.C. at 604-605; Leach Corp.
v. Commissioner, 30 T.C. 563, 579 (1958).
Petitioner and his brother each held 50 percent of Swirl's
stock. Petitioner advanced $350,000, and his brother advanced
$250,000. The $350,000 is about 58 percent of $600,000 ($350,000
plus $250,000). Petitioner's advance was neither proportionate
nor sharply disproportionate to his share of Swirl stock. This
factor is neutral.
4. Factors Which Favor Respondent
a. Whether The Loan is Subordinated to Other
Obligations
If repayment of an advance is subordinated to claims of
other creditors, it is more likely to be equity. American
Offshore, Inc. v. Commissioner, supra at 603; Ambassador
Apartments, Inc. v. Commissioner, 50 T.C. at 246; 2554-58 Creston
Corp. v. Commissioner, 40 T.C. at 937 n.3. The notes petitioner
received from Swirl were subordinated to the interests of
Chemical Bank. This factor suggests that the transfer was
equity.
b. Whether Swirl Repaid the Amount Advanced When Due
Subsequent payment history may show whether the recipient
of an advance intended to repay it when it was made. American
Offshore, Inc. v. Commissioner, supra at 606; see Diamond Bros.
Co. v. Commissioner, 322 F.2d 725, 732 (3d Cir. 1963), affg. T.C.
Memo. 1962-132; Wilbur Sec. Co. v. Commissioner, 279 F.2d 657,
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