Flint Industries, Inc. and Subsidiaries - Page 39




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          liability under the guaranties and not on protecting its equity             
          investment in G�nther.                                                      
               The record in this case establishes that there was an                  
          identity of interest between petitioner’s role as creditor and as           
          shareholder.  This factor favors respondent’s position.                     
                    j.  Payment of Interest Only Out of Profits                       
               This factor is essentially the same as the third factor, the           
          source of the payments.  Hardman v. United States, 827 F.2d 1409,           
          1414 (9th Cir. 1987).  It focuses, however, on how the parties to           
          the advances treated interest.  As we have stated, “A true lender           
          is concerned with interest.”  Id. at 605 (citing Estate of Mixon            
          v. United States, 464 F.2d at 409).  The failure to insist on               
          interest payments indicates that the payors expect to be paid out           
          of future earnings or through the increased market value of their           
          equity interest.  Am. Offshore, Inc. v. Commissioner, supra at              
          605 (citing Curry v. United States, 396 F.2d 630, 634 (5th Cir.             
          1968)).                                                                     
               Although the intercompany account balance accrued interest,            
          which was added to the yearend account balance reflected in the             
          books and records of both petitioner and G�nther, G�nther did               
          not, and financially could not, make any interest payments during           
          FYE May 31, 1992, 1993, or 1994.  Payment of the accrued interest           
          was entirely dependent on profits that G�nther did not have and             








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