PK Ventures, Inc. and Subsidiaries, et al. - Page 24

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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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