- 19 - 1987); Bauer v. Commissioner, 748 F.2d 1365, 1368 (9th Cir. 1984), revg. T.C. Memo. 1983-120; A.R. Lantz Co. v. United States, 424 F.2d 1330, 1333 (9th Cir. 1970); O.H. Kruse Grain & Milling v. Commissioner, 279 F.2d 123, 125-126 (9th Cir. 1960), affg. T.C. Memo. 1959-110. Because the control element suggests the opportunity to contrive a fictional debt, transfers of funds between related corporations are subject to particular scrutiny. In re Uneco, Inc., 532 F.2d 1204, 1207 (8th Cir. 1976). Transfers of funds between closely held corporations and shareholders are often characterized by informality, but in order to qualify for loan treatment in such situations the transfer of large amounts of funds generally should have some formal indicia of a loan. Lewis v. Commissioner, T.C. Memo. 1985-563. Where transfers of funds were made from a subsidiary corporation to a parent corporation through a centralized accounting system and where customary indicia of loans were not present, the transfers were treated as constructive dividends and not as loans. Alterman Foods, Inc. v. United States, supra. Petitioner argues that the shareholders of Peoplefeeders intended for Peoplefeeders to repay Square Pan the $3,751,930 difference between Peoplefeeders’ total cash receipts transferred into the Intercompany bank account and the total expenses and loan payments paid on behalf of Peoplefeeders out of the Intercompany bank account and that the use of funds in thePage: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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