- 11 -
loans. Miele v. Commissioner, supra at 567. On the other hand,
if no repayment was intended, the amounts are to be considered
constructive dividends. Id.
This determination depends on all the facts and
circumstances surrounding the transactions. Estate of Chism v.
Commissioner, 322 F.2d 956, 960 (9th Cir. 1963), affg. T.C. Memo.
1962-6; J.A. Tobin Constr. Co. v. Commissioner, supra at 1022;
Miele v. Commissioner, supra at 567; Roschuni v. Commissioner, 29
T.C. 1193, 1201-1202 (1958), affd. 271 F.2d 267 (5th Cir. 1959).
When an employee-shareholder is in substantial control of the
corporation, such control invites special scrutiny. Roschuni v.
Commissioner, supra at 1202. Mere declarations by an employee-
shareholder that he intended a transaction to constitute a loan
are insufficient if the transaction fails to meet more reliable
indicia of debt. J.A. Tobin Constr. Co. v. Commissioner, supra
at 1022.
In making the necessary factual determination, courts have
looked to a number of objective factors, including:
(1) [W]hether the promise to repay is evidenced by a
note or other instrument; (2) whether interest was
charged; (3) whether a fixed schedule for repayments
was established; (4) whether collateral was given to
secure payment; (5) whether repayments were made; (6)
whether the borrower had a reasonable prospect of
repaying the loan and whether the lender had sufficient
funds to advance the loan; and (7) whether the parties
conducted themselves as if the transaction were a loan.
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