CMA Consolidated, Inc. & Subsidiaries, Inc. - Page 133

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               Technically, petitioner had a right to enforce payment                 
          pursuant to the terms set forth in the January 1, 1995, and                 
          December 1, 1996, promissory notes.  In actuality, as discussed             
          above in connection with the prior three factors, payment of the            
          note principal and interest depended wholly on Cap Corp.’s                  
          success.                                                                    
               This factor supports petitioner but is outweighed by other             
          attendant circumstances making uncertain Cap Corp.’s actual                 
          payment of the note principal and interest to petitioner.                   
          5.  Participation in Management                                             
               The right to participate in the management of a business by            
          the entity advancing funds demonstrates that the advance may not            
          have been bona fide debt and instead was intended as an equity              
          investment.  Am. Offshore, Inc. v. Commissioner, 97 T.C. 579, 603           
          (1991).                                                                     
               From 1995 through December 2, 1996, Crispin and Koehler                
          continued to manage Cap Corp. in the same manner as before 1995.            
          Koehler was in charge of Cap Corp.’s day-to-day operations, but             
          he would consult with Crispin at least weekly.  After the                   
          December 2, 1996, debt conversion, Crispin took over Cap Corp.’s            
          day-to-day operations.                                                      
               This factor is neutral with respect to petitioner’s advances           
          during 1995 and 1996.  It favors respondent with respect to                 
          petitioner’s advances during 1997.                                          






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