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433 F.2d 879, 883 (6th Cir. 1970), affg. T.C. Memo. 1969-111;
Berthold v. Commissioner, 404 F.2d 119, 121 (6th Cir. 1968),
affg. T.C. Memo. 1967-102.
Establishing the taxpayer’s intent by direct evidence is
extremely difficult. Dean v. Commissioner, 57 T.C. 32, 43-44
(1971). Consequently, we must consider the taxpayer’s testimony
that he intended to repay, although such testimony is not
determinative, and must consider objective factors to determine
whether an advance constitutes a loan or a dividend. The
following objective factors are often considered in deciding
whether shareholder withdrawals or advances from a corporation
are loans or constructive dividends: (1) The extent of
shareholder control of the corporation; (2) the retained earnings
and dividend history of the corporation; (3) the size of the
withdrawals; (4) the presence of conventional indicia of debt,
such as promissory notes, collateral, and provision for interest;
(5) treatment of advances in corporate records; (6) the history
of repayment; and (7) the shareholder’s use of the funds. Busch
v. Commissioner, supra at 948; see also Alterman Foods, Inc. v.
United States, 505 F.2d 873, 877 n.7 (5th Cir. 1974).
Other objective criteria include “‘whether the corporation
imposed a ceiling on the amounts that might be borrowed, whether
there were definite maturity dates, attempts to force repayment,
intention or attempts to repay, and the shareholder’s ability to
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