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same terms." Segel v. Commissioner, 89 T.C. at 828 (citing
Scriptomatic, Inc. v. United States, 555 F.2d 364, 367 (3d Cir.
1977)); see also Calumet Indus., Inc. v. Commissioner, 95 T.C. at
287. Petitioner’s advance was far more speculative than what an
outside lender would have made, further suggesting it was a loan
in name only. See Fin Hay Realty Co. v. United States, 398 F.2d
at 697; Dixie Dairies Corp. v. Commissioner, 74 T.C. at 497.
Conclusion
In Calumet Indus., Inc. v. Commissioner, supra at 287, we
found the advances were made at the risk of the business, and it
was unlikely that disinterested investors would have given a
similar "loan". There were no principal or interest payments and
no evidence that the obligations, in fact, bore interest.
Further, the taxpayer failed to prove (1) the existence of formal
debt instruments, (2) the presence of any fixed maturity dates
for repayment of the advances, or (3) the presence of any
security for the advances. We also found the advances were made
in proportion to the taxpayer’s interest in the venture, and the
company, which was experiencing financial problems, was unable to
establish its own lines of credit or to borrow funds from banks
without the guaranty of the taxpayer. Significantly, the
taxpayer expected to be repaid from the debtor’s future earnings
and profits. We held that the advances were in the nature of
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