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determinable sum of money. A gift or contribution to capital is
not considered to be a debt for purposes of section 166. In re
Uneco, Inc., 532 F.2d 1204, 1207 (8th Cir. 1976); Zimmerman v.
United States, 318 F.2d 611, 612 (9th Cir. 1963); sec. 1.166-
1(c), Income Tax Regs.
The existence of a bona fide debtor-creditor relationship is
a question of fact to be determined on the basis of the facts and
circumstances in each case. Kean v. Commissioner, 91 T.C. 575,
594 (1988); Fisher v. Commissioner, 54 T.C. 905, 909 (1970). An
essential element of a bona fide debtor-creditor relationship is
the existence of a good faith intent on the part of the recipient
to repay and a good faith intent on the part of the person
advancing the funds to enforce repayment. Fisher v.
Commissioner, supra at 909-910. In determining the debtor’s and
creditor’s subjective intent, we consider whether there was a
reasonable expectation of repayment in light of the economic
realities of the situation. Id. at 910.
Petitioner contends that the $76,705 in advances to Koehler
represents bona fide debt. Respondent, on the other hand,
contends that the advances were made without reasonable
expectation of repayment. We conclude that these advances were
not bona fide debt.
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