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(1933). A bona fide debt is one that arises from a debtor-
creditor relationship and is based upon a legally valid and
enforceable obligation to pay a fixed or determinable sum of
money. See sec. 1.166-1(c), Income Tax Regs.
We have held that our consideration of whether a taxpayer
created a debt with a true expectation of repayment and with the
intent to enforce the repayment of that debt requires an
examination of the facts and circumstances. The following
factors have been used to aid in deciding whether an advance is
“debt” within the meaning of section 166: (1) The existence of a
promissory note or written evidence of indebtedness; (2) whether
and in what amount interest is charged; (3) whether there is a
fixed repayment schedule; (4) whether there is security or
collateral for the debt; (5) whether the lender made a demand for
repayment; (6) whether the loan is reflected as a loan in the
parties’ books and records; (7) whether and in what amounts any
repayments have occurred; and (8) the solvency of the borrower at
the time the parties made the loan. See, e.g., Mayhew v.
Commissioner, T.C. Memo. 1994-310.
Considering these factors in light of the record, we
conclude that petitioners have not established the existence of a
bona fide debt to petitioner. Petitioners did not offer evidence
of a promissory note or similar type of instrument of
indebtedness that would identify the advances as loans. Although
petitioners reported $125 of interest income on their Form 1040
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