Ernst L. Meier - Page 18




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          individual or entity by examining objective evidence of the                 
          taxpayer’s intentions.  See, e.g., In re Uneco, Inc., supra at              
          1207-1208.  Subjective evidence of the taxpayer’s intent will               
          also be considered.  Id. at 1209.                                           
               The following factors, among others, are often considered:             
          (1) Whether a purported loan was evidenced by a written                     
          promissory note; (2) whether interest was charged; (3) whether a            
          schedule for repayment and a stated maturity date were                      
          established; (4) whether security or collateral for the purported           
          loan existed (and was perfected); (5) whether the purported                 
          debtor corporation was thinly or inadequately capitalized;                  
          (6) whether the proportion of the corporation’s debt to equity              
          would justify the purported loan; (7) whether repayment of the              
          purported loan was predicated on the success of the purported               
          debtor’s business; (8) whether the purported debtor had the                 
          ability to obtain a similar loan from a bank; (9) whether the               
          purported creditor participated in the management of the                    
          corporation; and (10) whether the purported loan was repaid by              
          the stated maturity date.  Id. at 1207-1208; Clark v.                       
          Commissioner, 18 T.C. 780, 783 (1952), affd. per curiam 205 F.2d            
          353 (2d Cir. 1953).                                                         
               The failure of parties to produce evidence in their                    
          possession and control may give rise to a negative inference                
          that, if produced, the evidence would be unfavorable to them.               






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