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subordinated their purported loans to the loans of the corporation’s
regular creditors; (7) the intent of the parties; (8) “thin” or
adequate capitalization; (9) identity of interest between creditor
and stockholder; (10) payment of interest only out of “dividend”
money; and (11) the ability of the corporation to obtain financing
from outside sources at the time of the transfers. See, e.g., Bauer
v. Commissioner, 748 F.2d 1365, 1368 (9th Cir. 1984); Dixie Dairies
Corp. v. Commissioner, 74 T.C. 476, 493 (1980). As among these
factors “No one factor is controlling or decisive, and the court
must look to the particular circumstances of each case”, for “The
object of the inquiry is not to count factors, but to evaluate
them.” Bauer v. Commissioner, supra at 1368 (quoting Tyler v.
Tomlinson, 414 F.2d 844, 848 (5th Cir. 1969)).6
6 As we stated in Dixie Dairies Corp. v. Commissioner, 74
T.C. 476, 493-494 (1980):
The identified factors are not equally
significant, * * * nor is any single factor
determinative. Moreover, due to the myriad
factual circumstances under which debt-equity
questions can arise, all of the factors are
not relevant to each case. The “real issue
for tax purposes has long been held to be the
extent to which the transaction complies with
arm’s length standards and normal business
practice.” * * * “The various factors * * *
are only aids in answering the ultimate
question whether the investment, analyzed in
terms of its economic reality, constitutes
risk capital entirely subject to the fortunes
of the corporate venture or represents a
strict debtor-creditor relationship.” * * *
As expressed by this Court, the ultimate
question is “Was there a genuine intention to
create a debt, with a reasonable expectation
(continued...)
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