- 6 -
was advanced and $57,650 was repaid. The three sister
corporations failed to file corporate Federal income tax returns
for the years under consideration.
OPINION
To decide whether advances constitute debt or equity, we are
to make a factual inquiry into whether a taxpayer has shown a
bona fide debtor-creditor relationship. Calumet Indus., Inc. v.
Commissioner, 95 T.C. 257 (1990); Segel v. Commissioner, 89 T.C.
816, 827 (1987). Although bona fide debt may exist between
related parties, such transactions between related parties are to
be subjected to particular scrutiny. In re Uneco, Inc., 532 F.2d
1204, 1207 (8th Cir. 1976). The determination of whether
advances to a corporation have created bona fide indebtedness
depends on whether there is an intention to create an
unconditional obligation to repay the advances. See Raymond v.
United States, 511 F.2d 185, 190 (6th Cir. 1975).
In Cerand I, we identified 13 factors used by courts to
assist them in deciding whether particular advances constituted
debt or equity. We noted that the factors are not equally
significant and that no factor is determinative or relevant in
each case. John Kelly Co. v. Commissioner, 326 U.S. 521, 530
(1946); Estate of Mixon v. United States, 464 F.2d 394, 402 (5th
Cir. 1972). Finally, we recognized that the factors used are
only aids in our analysis of whether the advances (1) constitute
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