Hubert Enterprises, Inc. and Subsidiaries, et al. - Page 31

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          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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