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1998 and 1999 against their basis in their Tomson stock; and
(3) $50,000 of the distribution that the Mansours received from
Micca in 1996 was not taxable because Mr. Mansour used that
amount to buy out another shareholder’s interest in Micca. We
address each of these arguments in turn.
2. Repayment of Shareholder Loans by Mina of Forest
City and Bishoy
Whether a withdrawal of funds by a shareholder from a
corporation or an advance made by a shareholder to a corporation
creates a true debtor-creditor relationship is a factual question
to be decided based on all of the relevant facts and
circumstances. Haag v. Commissioner, 88 T.C. 604, 615 (1987),
affd. without published opinion 855 F.2d 855 (8th Cir. 1988); see
also Haber v. Commissioner, 52 T.C. 255, 266 (1969), affd. 422
F.2d 198 (5th Cir. 1970); Roschuni v. Commissioner, 29 T.C. 1193,
1201-1202 (1958), affd. 271 F.2d 267 (5th Cir. 1959). For
disbursements to constitute true loans, there must have been, at
the time that the funds were transferred, 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, supra at 615-616; see
also Haber v. Commissioner, supra at 266. Direct evidence of a
taxpayer’s state of mind is generally unavailable, so courts have
focused on certain objective factors to distinguish repayments of
bona fide loans from disguised dividends, compensation, and
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