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regard to the funds transferred to Border. See Dunnegan v.
Commissioner, T.C. Memo. 2002-119.
Petitioner and Mr. Tedford never demanded nor did they ever
receive repayment of the funds or interest thereupon that they
transferred to Border. By contrast, Border made principal and
interest payments to SunWest, an outside creditor.
This factor favors the respondent’s position.
E. Increase in Management Participation
If an individual makes a monetary transfer to a corporation
and as a result receives an increased right to participate in the
management of the corporation, such participation tends to
demonstrate that the advance was not a bona fide debt but rather
a capital investment. Am. Offshore, Inc. v. Commissioner, 97
T.C. at 603.
Neither petitioner, nor Mr. Tedford received an increased
role in Border’s management by virtue of the monetary transfers.
Any participation in Border’s management by petitioner would have
been because of her position as vice president or Mr. Tedford’s
complete control of the corporation. Therefore, this factor
favors petitioner’s position.
F. Status Equal or Inferior To Other Creditors
Whether a monetary transfer is subordinated to an outside
creditor bears on whether a taxpayer was acting as a creditor or
an investor. Estate of Mixon v. United States, supra at 401. In
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