William H. Breucher III - Page 13

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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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