-35-
approximately 2-1/2 years after HEI’s first transfer to ALSL and
did so only on account of ALD’s claimed liquidation. Moreover,
notwithstanding this lack of repayments throughout the referenced
2-1/2-year period, HEI continued to transfer funds to ALSL
without any schedule for repayment. HEI even transferred a total
of $95,000 to ALSL in 1997 even though in December 1996 HEI
decided to stop funding the Seasons of Sarasota project and ALSL
treated the “debt” as discharged on its Federal income tax return
for 1996.
Petitioners ask the Court to conclude that the issuance of
the ALSL note as a demand note strongly supports a finding of
debt because the obligeee of a demand note, unlike an equity
holder, may at any time demand repayment. We decline to reach
such a conclusion. As noted by the Court of Appeals for the
Eleventh Circuit, “an unsecured note due on demand with no
specific maturity date, and no payments is insufficient to
evidence a genuine debt.” Stinnett’s Pontiac Serv., Inc. v.
Commissioner, 730 F.2d at 638; cf. Bayer Corp. v. Mascotech, Inc.
(In re Autostyle Plastics, Inc.), supra at 750 (“use of demand
notes along with a fixed rate of interest and interest payments
is more indicative of debt than equity” (Emphasis added.)).
Repayment of the ALSL note was unsecured, HEI never prepared a
written repayment schedule as to the transfers, and ALSL never
had assets available to pay all, or even a significant part, of
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