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12. Increased Management Participation
If making an advance increases an individual’s right to
participate in the management of the entity which received it,
then that person may be participating as a shareholder rather
than as a creditor. See Estate of Mixon v. United States, supra
at 406; United States v. Henderson, supra. Mrs. Rosenberg
participated in Cabana Boy’s management because petitioners owned
63 percent of the stock. This factor is neutral.
13. Advances Proportionate to Stock Ownership
If advances by shareholders are proportionate to their stock
ownership, an equity contribution is indicated. See Estate of
Mixon v. United States, supra at 409; American Offshore, Inc. v.
Commissioner, supra at 604. Petitioners owned 63 percent of the
stock and provided all of the advances. Thus, while petitioners
were the controlling shareholders, the advances were not
proportionate. This factor is neutral.
14. Right To Enforce Repayment
A taxpayer’s right to enforce repayment of an advance
suggests that the advance is a loan. See Estate of Mixon v.
United States, supra at 405; American Offshore, Inc. v.
Commissioner, supra at 603. There is no evidence that
petitioners had any right to enforce repayment of the claimed
advances. Petitioners contend that they had a right to enforce
repayment because Dr. Rosenberg could call the loans on demand.
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