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relating to the transfers and applied the factors discussed in
the preceding section to determine whether the transfers were
bona fide debt or capital contributions.
Petitioners argue that the following factors support their
contention that the transfers from PK Ventures, TBPC, and TPTC to
PKVI LP during 1986 through 1991 were bona fide loans:
(1) Formal indicia of debt, (2) risk involved, (3) participation
in management and identity of interest, (4) intent of the parties
(5) capitalization, (6) independent financing, and
(7) acquisition of capital assets and failure to repay on the due
date. In making their argument, petitioners do not attempt to
distinguish the transfers from TBPC and TPTC to PKVI LP from the
transfers between PK Ventures and PKVI LP. Accordingly, from
this point forward, we refer to these transfers as occurring
between PK Ventures and PKVI LP. After considering the relevant
factors and weighing the evidence, we reject petitioners’
contention that the transfers from PK Ventures to PKVI LP were
bona fide loans for the reasons discussed below.
First, we are unpersuaded that the PKVI LP promissory notes
are reliable evidence of any indebtedness between PKVI LP and
PK Ventures. There is no indication that the PKVI LP promissory
notes were completed contemporaneously with PKVI LP’s receipt of
funds from PK Ventures. Rather, Rose testified that his
preparation of the PKVI LP promissory notes was “ministerial” and
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