Nariman Teymourian - Page 11

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          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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