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C. Discussion
To persuade us that the corporation lacked borrowing power,
petitioners’ claim: “The Corporation was undercapitalized, the
loans were utilized exclusively to purchase capital assets and
the corporation did not have the capacity to repay the loans.”
Certainly, petitioners have addressed certain factors pertinent
to debt-equity analysis. Nevertheless, they have failed to
persuade us that the intent of the parties to the loans was other
than to create indebtedness of the corporation and that there
were not genuine and realistic prospects of repayment by the
corporation. See Santa Anita Consol., Inc. v. Commissioner,
supra.
If intent is to be divined from actions, then the actions of
the parties to the loans unequivocally signify the intent to
create an indebtedness of the corporation. The loan agreement,
note, and mortgage all appear to be standard, form documents
intended to create, or secure, indebtedness of the named
borrower, viz, the corporation. The guaranty agreement also
appears to be a standard, form document. The parties have
stipulated that petitioner and his father were guarantors of the
loan agreement. The language in the guaranty agreement that
petitioner, “as a primary obligor”, guarantees the corporation’s
obligations, may have been intended to create in petitioner (and
his father) joint and several liability with the corporation for
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