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In the instant case, whether or not petitioner and Mr.
Tedford would be repaid was contingent upon the success of
Border’s business. Other than the due date on the “Post-it” note
attached to the U.S. Life letter, no fixed maturity date existed.
There was no fixed repayment schedule, nor did petitioner show
there was any deadline for repayment of balances Border owed.
This factor favors respondent’s position.
C. Source of Payments
If it is impossible to estimate when a monetary transfer
will be repaid because repayment is contingent upon future
profits, a capital investment is indicated. Affiliated Research,
Inc. v. United States, 351 F.2d 646, 648 (1965). In addition,
when a debtor’s repayment is contingent upon earnings the lender
acts “‘as a classic capital investor hoping to make a profit, not
as a creditor expecting to be repaid regardless of the company’s
success or failure.’” Calumet Indus., Inc. v. Commissioner,
supra at 287-288 (quoting In re Larson, 862 F.2d 112, 117 (7th
Cir. 1988)).
Despite knowing that Border was struggling financially and
that it did not currently have sufficient cashflow to repay them,
petitioner and Mr. Tedford chose to transfer funds to Border.
Border never made any payments to petitioner and Mr. Tedford, nor
did petitioner and Mr. Tedford know whether Border ever would be
able to repay them. Although Mr. Tedford executed demand notes
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