- 50 -
or other evidence of indebtedness exists; (2) whether interest is
charged; (3) whether there is a fixed schedule for repayments;
(4) whether any security or collateral is requested; (5) whether
there is any written loan agreement; (6) whether a demand for
repayment has been made; (7) whether the parties' records, if
any, reflect the transaction as a loan; (8) whether any
repayments have been made; and (9) whether the borrower was
solvent at the time of the loan, see Zimmerman v. United States,
supra at 613; Estate of Maxwell v. Commissioner, 98 T.C. 594, 604
(1992), affd. 3 F.3d 591 (2d Cir. 1993); Clark v. Commissioner,
18 T.C. 780 (1952), affd. 205 F.2d 353 (2d Cir. 1953). These
factors focus primarily on ascertaining the intent of the parties
to the transfer through their objective and subjective
expectations. Bauer v. Commissioner, 748 F.2d 1365, 1367-1368
(9th Cir. 1984), revg. T.C. Memo. 1983-120; A.R. Lantz Co. v.
Commissioner, 424 F.2d 1330, 1333-1334 (9th Cir. 1970).
Applying this two part analysis to the subject transactions,
we find that the $30,000 transfer to Ms. Wong fails the first
part of this analysis. Because the underlying note conditions
repayment of the "loan" on the sale of her house, she was under
no absolute obligation to repay the "loan". She would never have
to repay the "loan", for example, if she never sold her home.
This transaction is not bona fide debt for purposes of section
166.
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