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2. Applicable Factors
The following factors suggest that a transfer to a
shareholder from a corporation is a loan rather than a dividend:
(a) The shareholder does not control the corporation; (b) the
corporation is restricted in the amount of funds it can lend to
the shareholder; (c) the corporation has had substantial earnings
and paid a large amount of dividends; (d) the shareholder is able
to repay the amount transferred; (e) the corporation seeks
repayment; (f) there is an interest-bearing note or other
evidence of indebtedness; (g) there is a fixed repayment
schedule; (h) there is security or collateral; (i) there is a
written loan agreement; (j) the parties treat the transactions as
loans in their records; (k) the borrower has made repayments; and
(l) the borrower intended to repay the amounts transferred.
Busch v. Commissioner, 728 F.2d 945, 948 (7th Cir. 1984), affg.
T.C. Memo. 1983-98; Dolese v. United States, 605 F.2d 1146, 1153
(10th Cir. 1979); Alterman Foods, Inc. v. United States, 505 F.2d
873, 877 n.7 (5th Cir. 1974); Road Materials, Inc. v.
Commissioner, 407 F.2d 1121, 1123-1124 (4th Cir. 1969), affg. in
part and vacating in part T.C. Memo. 1967-187; Zimmerman v.
United States, 318 F.2d 611, 613 (9th Cir. 1963); Clark v.
Commissioner, 18 T.C. 780, 783 (1952), affd. 205 F.2d 353 (2d
Cir. 1953); Frierdich v. Commissioner, T.C. Memo. 1989-393, affd.
925 F.2d 180 (7th Cir. 1991); McLemore v. Commissioner, T.C.
Memo. 1973-59, affd. 494 F.2d 1350 (6th Cir. 1974). The factors
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