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are not present in the advances to TLC and do not support an
intention by J&J to collect on the advances.
9. The Use to Which the Advances Were Put
Use of advances to meet the daily operating needs of the
corporation, rather than to purchase capital assets, is
indicative of bona fide indebtedness. See Stinnett’s Pontiac
Serv., Inc. v. Commissioner, 730 F.2d at 640; Raymond v. United
States, 511 F.2d at 191; Estate of Mixon v. Commissioner, 464
F.2d at 410. The advanced funds were used to pay the operating
expenses of TLC. Accordingly, this factor favors petitioners’
position.
10. The Failure of the Debtor To Repay
The absence of payments of principal or interest is a strong
indication that the advances were capital contributions rather
than loans. See Stinnett’s Pontiac Serv., Inc. v. Commissioner,
supra at 640; Raymond v. Commissioner, supra at 191; Austin
Village, Inc. v. United States, 432 F.2d 741, 745 (1970). It is
undisputed that TLC never made a payment over the 4-year period
when it received funds from J&J, nor did J&J make any demand for
payment. Accordingly, it appears that J&J never intended to
compel repayment of the advances.
11. The Risk Involved in Making The Advances
The absence of security for the advances indicates that the
advances were more likely capital contributions. See In re Lane,
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