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The credible evidence indicates that none of the debenture
holders was granted a management position or an increase in
voting rights as a result of the receipt of the debenture funds
by petitioner.
Payments
A significant debt-equity factor is whether a corporation
repays its obligations on time. See Fries v. Commissioner, T.C.
Memo. 1997-93 (citing In re Lane, 742 F.2d 1311, 1317 (11th Cir.
1984)).
Petitioner has timely made all scheduled payments of
principal and designated interest due on the debenture notes.
Intent of the Parties
In resolving debt-equity questions, both objective and
subjective evidence of a taxpayer’s intent are considered and
given weight in light of the particular circumstances of a case.
See In re Uneco, Inc., 532 F.2d 1204, 1209 (8th Cir. 1976).
With regard to the debenture funds, credible trial testimony
was offered that a debtor-creditor relationship was intended
between petitioner and the debenture holders with regard to the
debenture funds. The debenture notes were executed in favor of
each of the debenture holders. The debenture holders expected
repayment of the debenture funds. The fixed dates for the
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