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Whether funds received by a corporation represent debt or
equity is a question of fact generally to be considered and
analyzed by reference to all of the evidence.2 Dixie Dairies
Corp. v. Commissioner, 74 T.C. 476, 493 (1980).
Courts have identified and considered various factors in
deciding questions of debt versus equity. See, e.g., In re
Uneco, Inc., 532 F.2d 1204, 1208 (8th Cir. 1976) (10 factors);
Estate of Mixon v. United States, 464 F.2d 394, 402 (5th Cir.
1972) (13 factors); Am. Offshore, Inc. v. Commissioner, 97 T.C.
579, 602-606 (1991) (13 factors). The various factors are not
equally significant, however, and no one factor is determinative.
John Kelley Co. v. Commissioner, 326 U.S. 521, 530 (1946).
Due to differing factual circumstances under which debt-
equity questions arise, not all of the factors are necessarily
relevant to each case. Dixie Dairies Corp. v. Commissioner,
supra at 493-494. The overall analysis of the Court seeks to
determine whether there was an intent to create a debt with a
reasonable expectation of repayment and, if so, whether that
intent comports with the economic reality of creating a debtor-
2 Whether a shift in the burden of proof is applicable in
this case is unclear. The parties do not raise the issue, and
the record does not indicate when respondent’s examination of
petitioner’s 1996 corporate Federal income tax return began. See
sec. 7491; Internal Revenue Service Restructuring and Reform Act
of 1998, Pub. L. 105-206, sec. 3001(a), 112 Stat. 726 (providing
that July 22, 1998, is the effective date of sec. 7491). In any
event, resolution of this case does not hinge on placement of the
burden of proof.
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