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transferred, [there was] an unconditional intention on the part
of the transferee to repay the money, and an unconditional
intention on the part of the transferor to secure payment.'"
Geftman v. Commissioner, T.C. Memo. 1996-447 (quoting Haag v.
Commissioner, 88 T.C. 604, 616 (1987), affd. without published
opinion 855 F.2d 855 (8th Cir. 1988)). In other words, the
parties must intend to create bona fide debt. The intention of
the parties "relates not so much to what the transaction is
called, or even what form it takes as it does to an actual intent
that money advanced will be repaid." Berthold v. Commissioner,
404 F.2d 119, 122 (6th Cir. 1968), affg. T.C. Memo. 1967-102; see
also Livernois Trust v. Commissioner, 433 F.2d 879, 882 (6th Cir.
1970), affg. T.C. Memo. 1969-111. However, because direct
evidence of a taxpayer's state of mind is not generally
available, courts have focused on certain objective factors to
determine whether a bona fide loan exists: (1) The existence or
nonexistence of a debt instrument; (2) provisions for security,
interest payments, and a fixed repayment date; (3) whether the
parties' records, if any, reflect the transaction as a loan; (4)
the source of repayment and the ability to repay; (5) the
relationship of the parties; (6) whether any repayments have been
made; (7)whether a demand for repayment has been made; and (8)
failure to pay on the due date or to seek a postponement. See
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