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Welch v. Commissioner, 204 F.3d 1228, 1230 (9th Cir. 2000), affg.
T.C. Memo. 1998-121; see also J.A. Tobin Construction Co. v.
Commissioner, supra at 1022. No single factor is controlling,
and the transaction must be examined as a whole. Welch v.
Commissioner, supra at 1230. We address each of these factors in
turn.
1. Petitioner’s Promise To Pay Was Not Evidenced by a Note
The absence of a note or other loan documentation is
indicative of a constructive dividend. Miele v. Commissioner,
supra at 568-569; see also Roschuni v. Commissioner, supra at
1201-1202; Jones v. Commissioner, T.C. Memo. 1997-400, affd.
without published opinion 177 F.3d 982 (11th Cir. 1999); Weigel
v. Commissioner, T.C. Memo. 1996-485. However, loans without
documentation are not uncommon between a shareholder and a
closely held corporation, and such documentation is not a
prerequisite to finding that a loan exists. Miele v.
Commissioner, supra at 568-569; Weigel v. Commissioner, supra.
Petitioner stipulated that he did not execute formal loan
documents with respect to the disbursements made by Caspian
during the years in issue. While this factor alone is not
determinative, it weighs in favor of finding a constructive
dividend.
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