- 40 -
was not likely to have in the future. On balance, this factor
favors respondent’s position.
k. Ability of G�nther To Obtain Funds From
Outside Lending Institutions
“[T]he touchstone of economic reality is whether an outside
lender would have made the payments in the same form and on the
same terms.” Segel v. Commissioner, 89 T.C. 816, 828 (1987)
(citing Scriptomatic, Inc. v. United States, 555 F.2d 364, 367
(3d Cir. 1977)); see also Calumet Indus., Inc. v. Commissioner,
95 T.C. at 287.
The record contains only vague and limited information on
G�nther’s financial status before FYE May 31, 1992, and no
evidence tending to prove that G�nther could have obtained
comparable loans from unrelated financial institutions. The
limited evidence regarding G�nther’s financial condition before
FYE May 31, 1992, tends to show that G�nther was not in a
position to obtain substantial funding from any financial
institution without meaningful security, guaranties from a third
party, and fixed payment terms. Petitioner’s financial support
of G�nther through the mechanism of the intercompany account had
none of these characteristics and was far more speculative. See
Fin Hay Realty Co. v. United States, 398 F.2d at 697; Dixie
Dairies Corp. v. Commissioner, 74 T.C. at 497.
This factor favors respondent’s position.
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