Dennis R. Schenk - Page 6

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          with the economic reality of creating a debtor-creditor                            
          relationship.  Dixie Dairies Corp. v. Commissioner, supra at 494.                  
                The objective indicia of a bona fide debt include whether a                  
          note or other evidence of indebtedness existed and whether                         
          interest was charged.  See Clark v. Commissioner, 18 T.C. 780,                     
          783 (1952), affd. 205 F.2d 353 (2d Cir. 1953).  Also considered                    
          are the existence of security or collateral, the demand for                        
          repayment, records that may reflect the transaction as a loan,                     
          and the borrower's solvency at the time of the loan.  See Road                     
          Materials, Inc. v. Commissioner, 407 F.2d 1121 (4th Cir. 1969),                    
          affg. in part and vacating in part and remanding T.C. Memo. 1967-                  
          187; Zimmerman v. United States, 318 F.2d 611, 613 (9th Cir.                       
          1963).                                                                             
                Petitioner and Maxted did not document their relationship                    
          through the issuance of a promissory note.  In addition,                           
          petitioner did not ask for collateral or security in exchange for                  
          the $10,000.  However, the absence of formal indicia of debt is                    
          not dispositive here.  Rather, the facts in the present case                       
          indicate petitioner's intent to create a debt.  Specifically,                      
          petitioner believed Maxted's word that he would repay the advance                  
          because of a previous business relationship with him and their                     
          Montana roots.  Further, petitioner visited Maxted's car-shade                     
          operation, observed the construction and packaging of the car                      







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