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Development was going out of business, and petitioner was "the
common factor" among the corporations.
The question before us is whether petitioner actually
assumed Development's indebtedness to INI. If petitioner
actually assumed Development's indebtedness to INI, a debtor-
creditor relationship would have been created between petitioner
and INI. Therefore, we think that the factors for determining
whether a transfer of money between related parties creates a
debtor-creditor relationship are the same factors to use in
deciding whether petitioner actually assumed Development's
indebtedness to INI.
A transfer of money is a loan for Federal income tax
purposes if, at the time the funds were transferred, the
transferee unconditionally intended to repay the money, and the
transferor unconditionally intended to secure repayment. See
supra p. 16.
Thus, for this Court to find that petitioner and INI entered
into a valid debtor-creditor relationship, petitioner must prove
that at the time of the alleged assumption, he unconditionally
intended to repay $417,978 to INI, and that INI intended to
unconditionally secure repayment of that amount. Rule 142(a);
Welch v. Helvering, 290 U.S. at 115.
The determination of whether a transfer was made with a real
expectation of repayment and an intention to enforce the debt
depends on all the facts and circumstances including whether: (1)
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