-31-
Commissioner, 404 F.2d 119, 122 (6th Cir. 1968) (“Established
authority holds that the intention of the parties is the
controlling factor in determining whether or not advances should
be termed loans.”), affg. T.C. Memo. 1967-102; cf. Recklitis v.
Commissioner, 91 T.C. 874, 905 (1988).
The Court of Appeals for the Sixth Circuit, to which an
appeal of this case most likely lies, refers primarily to eleven
factors in distinguishing debt from equity. See Roth Steel Tube
Co. v. Commissioner, supra at 630. These factors are: (1) The
name given to an instrument underlying a transfer of funds;
(2) the presence or absence of a fixed maturity date and a
schedule of payments; (3) the presence or absence of a fixed
interest rate and actual interest payments; (4) the source of
repayment; (5) the adequacy or inadequacy of capitalization;
(6) the identity of interest between creditors and equity
holders; (7) the security for repayment; (8) the transferee’s
ability to obtain financing from outside lending institutions;
(9) the extent to which repayment was subordinated to the claims
of outside creditors; (10) the extent to which transferred funds
were used to acquire capital assets; and (11) the presence or
absence of a sinking fund to provide repayment. Id. No one
factor is controlling, and courts must consider the particular
circumstances of each case. Id.
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