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creditors; (7) the intent of the taxpayers and the corporations;
(8) whether the taxpayers who are claiming creditor status were
also shareholders of the corporations; (9) the capitalization of
the corporations; (10) the ability of the corporations to obtain
financing from outside sources at the time of the transfers; (11)
how the funds transferred were used by the corporations; (12) the
failure of the corporations to repay; and (13) the risk involved
in making the transfers. Dixie Dairies Corp. v. Commissioner,
supra at 493.
These factors serve only as aids in evaluating whether
transfers of funds to closely held corporations should be
regarded as capital contributions or as bona fide loans. Boatner
v. Commissioner, T.C. Memo. 1997-379. No single factor is
controlling. Dixie Dairies Corp. v. Commissioner, supra at 493.
Utilizing some of the factors noted above, we come to the
conclusion that no debtor-creditor relationship was created.
First, we observe that although some of petitioner's,
advances to Mr. Kelley, or payments made on his behalf, were
evidenced by notes, no payments of interest or principal were
ever made on any of the notes. In addition, petitioner continued
making these alleged "loans" despite the fact that both Mr.
Kelley and TIC/Multilogic repeatedly failed to repay the notes
when they became due. Petitioner's failure to demand repayment
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