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Before petitioner learned of G�nther’s dire financial
condition, G�nther’s local management ran its day-to-day
operations with oversight from petitioner. After petitioner
learned of G�nther’s financial problems, petitioner’s management
became more actively involved in G�nther’s operations, eventually
assuming direct control. Although respondent argues that this
factor favors equity, we reject the argument. Petitioner did not
receive an increased role in G�nther’s management during FYE
1992, 1993, and 1994 in exchange for petitioner’s advances;
rather, petitioner’s increased participation in management was a
necessary part of its effort to prevent G�nther’s financial
collapse from becoming public. This factor is neutral.
f. Status Equal or Inferior to Other Creditors
Whether an advance is subordinated to regular creditors
bears on whether the taxpayer was acting as a creditor or an
investor. Estate of Mixon v. United States, supra at 406. In
addition, “Failure to demand timely repayment effectively
subordinates the intercompany debt to the rights of other
creditors who receive payment in the interim.” Am. Offshore,
Inc. v. Commissioner, supra at 603 (citing Inductotherm Indus.,
Inc. v. Commissioner, T.C. Memo. 1984-281, affd. without
published opinion 770 F.2d 1071 (3d Cir. 1985)).
Petitioner effectively subordinated its intercompany
advances to G�nther for the benefit of third-party creditors in
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