-61-
solely) on the earnings and assets of the LRFLP. The only way
that decedent could have repaid those amounts would have been for
the LRFLP to distribute formally some of its earnings to her or
to redeem her limited partnership interest at a price greater
than the amount reported as due. While petitioners assert that
the “loans” were ultimately repaid in connection with the
redemption of the Lillie Investment Trust’s limited partnership
interest, such a post mortem transaction serves only to
strengthen our finding that decedent continued to enjoy the
transferred assets up until her death.
This factor weighs toward a finding that decedent’s use of
the funds of the LRFLP did not create bona fide debt.
v. Capitalization
Thin or inadequate capitalization to fund a transferee’s
obligations weighs against a finding of bona fide debt. See
Stinnett’s Pontiac Serv., Inc. v. Commissioner, supra at 639.
We consider this factor to be irrelevant in the context of
this case and give it no weight.
vi. Identity of Interest
Transfers made in proportion to ownership interests weigh
against a finding of bona fide debt. A sharply disproportionate
ratio between an ownership interest and the debt owing to the
transferor by the transferee generally weighs toward a finding of
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