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556, 567 (1971), affd. without published opinion 474 F.2d 1338
(3d Cir. 1973).
Petitioner bears the burden of proving that the amounts in
question constitute loans. Rule 142(a); Welch v. Helvering, 290
U.S. 111, 115 (1933).
Courts typically determine whether the requisite intent to
repay was present by examining objective evidence of the parties'
intentions. See, e.g., Busch v. Commissioner, 728 F.2d 945, 948
(7th Cir. 1984), affg. T.C. Memo. 1983-98; Alterman Foods, Inc.
v. United States, 505 F.2d 873, 877 n.7 (5th Cir. 1974).
The following list of factors is often set forth in
analyzing whether transfers of funds between related corporations
should be treated as loans, as equity, or as dividends:
(1) Whether the transfers of funds are evidenced by written
promissory notes and are otherwise reflected on the taxpayer’s
books and records as loans; (2) the presence or absence of stated
maturity dates; (3) the source of payments; (4) the right to
enforce payments of principal and interest; (5) participation in
management; (6) a status equal to or inferior to that of regular
corporate creditors; (7) the intent of the parties; (8) "thin" or
adequate capitalization; (9) the identity of interest between
shareholders and creditors; (10) repayments on the purported
loans only out of profits; and (11) the ability of the purported
debtor to obtain loans from outside lending institutions.
Hardman v. United States, 827 F.2d 1409, 1411-1412 (9th Cir.
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