- 11 -
Commissioner, 229 F.2d 703 (7th Cir. 1956), affg. T.C. Memo.
1954-243; Haag v. Commissioner, supra at 615.
To prove that the Amoco advance was a bona fide debt,
petitioner must show that (1) its obligation to repay the advance
was unconditional (i.e., was legally valid and enforceable), and
(2) the obligation arose from a debtor-creditor relationship
between petitioner and Amoco. Andrew v. Commissioner, 54 T.C.
239, 244-245 (1970); Clark v. Commissioner, 18 T.C. 780, 783-784
(1952), affd. per curiam 205 F.2d 353 (2d Cir. 1953).
In order for a debtor-creditor relationship to have arisen,
both parties to the transaction, at the time the funds were
furnished, must have had an actual intent to establish such a
relationship. Fisher v. Commissioner, 54 T.C. 905 (1970).
Whether a debtor-creditor relationship exists is a question to be
determined on the basis of all the facts and circumstances. Haag
v. Commissioner, supra. The following nonexclusive factors, none
of which is controlling by itself, are relevant to this
determination: (1) Whether a note or other evidence of
indebtedness exists; (2) whether interest is charged; (3) whether
there is a fixed maturity date or schedule for repayments; (4)
whether any security or collateral is requested; (5) whether
there is any written loan agreement; (6) whether a demand for
repayment has been made; (7) whether any repayments have been
made; (8) whether the parties’ records, if any, reflect the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011