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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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