Robert R. Plante and Mary B. Plante - Page 12

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          166(a).  To justify a deduction under section 166, petitioners              
          must establish that a bona fide debt existed.  Sec. 1.166-1(c),             
          Income Tax Regs.  A bona fide debt arises from a debtor-creditor            
          relationship based upon a valid and enforceable obligation to pay           
          a fixed or determinable sum of money.  A shareholder's                      
          contribution to the capital of a corporation is not considered a            
          debt for purposes of section 166.  Sec. 1.166-1(c), Income Tax              
          Regs; see United States v. Uneco, Inc. (In re Uneco, Inc.), 532             
          F.2d 1204, 1207 (8th Cir. 1976); Kean v. Commissioner, 91 T.C.              
          575, 594 (1988).                                                            
               Characterization of an advance by a shareholder to a                   
          corporation as either a loan (debt) or contribution to capital              
          (equity) is a question of fact that can be resolved only by                 
          reviewing the circumstances surrounding the transaction.  Dixie             
          Dairies Corp. v. Commissioner, 74 T.C. 476, 493 (1980).                     
               In reviewing the surrounding circumstances of such                     
          transactions, the following factors should be considered:  (1)              
          The name given to the certificate evidencing the indebtedness;              
          (2) the presence or absence of a fixed maturity date; (3) the               
          source of payments; (4) the right to enforce payment of principal           
          and interest; (5) participation in management flowing as a result           
          of the advance; (6) the status of the contribution in relation to           
          regular corporate creditors; (7) the intent of the parties; (8)             
          "thin" or adequate capitalization; (9) identity of interest                 

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