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with examinations commencing after July 22, 1998, the burden of
proof shifts to respondent if, among other requirements,
petitioner introduces “credible evidence with respect to any
factual issue relevant to ascertaining” her liability for the tax
deficiency at issue. Even if we were to find that petitioner has
met the requirements of section 7491(a)(1), respondent has
presented sufficient evidence to meet his burden of proof.
We shall first consider the character of the transfers made
by petitioners to PPP. For Federal income tax purposes, a
transaction will be characterized as a loan if there was "an
unconditional obligation on the part of the transferee to repay
the money, and an unconditional intention on the part of the
transferor to secure repayment". Haag v. Commissioner, 88 T.C.
604, 616 (1987), affd. without published opinion 855 F.2d 855
(8th Cir. 1988). What is important is the bona fide intent that
the debt shall be repaid, rather than the name of the transaction
or the form the transaction takes. Berthold v. Commissioner, 404
F.2d 119, 122 (6th Cir. 1968), affg. T.C. Memo. 1967-102; Patrick
v. Commissioner, T.C. Memo. 1998-30, affd. without published
opinion 181 F.3d 103 (6th Cir. 1999).
Petitioner testified that PPP and petitioners intended the
payments made by PPP to be loan repayments. The mere declaration
of intent, however, is not determinative without further evidence
substantiating the existence of bona fide debt. See Turner v.
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