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L. Use of the Funds by the Corporation
Generally, the fact that an advance is used to satisfy the
daily operating needs of a corporation indicates a bona fide
indebtedness, whereas a monetary transfer resembles equity if it
is used to acquire capital assets. Estate of Mixon v. United
States, 464 F.2d at 410.
Mr. Tedford and petitioner made the transfers to keep Border
from defaulting on its bank loans and other obligations, to pay
Border’s operating expenses, and to allow Border to buy supplies
and equipment. As the transferred funds were used both to
satisfy the daily operating needs of Border and to acquire
capital assets, we conclude this factor is neutral.
Consequently, we do not rely upon or apply this factor in making
our analysis.
M. Failure To Repay on the Due Date
In the instant case there were no fixed dates of repayment.
Petitioner and Mr. Tedford never demanded repayment, nor did
Border ever make any attempt to repay them.
This factor favors respondent’s position.
II. Conclusion
Upon consideration of the above factors, we hold that the
monetary transfers to Border from Mr. Tedford and petitioner did
not constitute bona fide loans, and, therefore, the transfers
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