-63-
This factor weighs toward a finding that decedent’s use of
the funds of the LRFLP did not create bona fide debt.
viii. Inability To Obtain Comparable Financing
The question of whether a transferee could have obtained
comparable financing from an independent source is relevant in
measuring the economic reality of a transfer. See Roth Steel
Tube Co. v. Commissioner, supra at 631; Estate of Mixon v. United
States, supra at 410. Evidence that a transferee could not at
the time of the transfer obtain a comparable loan from an arm’s-
length creditor weighs against a finding of bona fide debt. See
Roth Steel Tube Co. v. Commissioner, supra at 631; Stinnett’s
Pontiac Serv., Inc. v. Commissioner, 730 F.2d at 640; Calumet
Indus., Inc. v. Commissioner, 95 T.C. 257, 287 (1990).
We do not believe that a creditor dealing at arm’s length
would have lent decedent money under the terms that petitioners
allege were entered into between decedent and the LRFLP.
This factor weighs toward a finding that decedent’s use of
the funds of the LRFLP did not create bona fide debt.
ix. Subordination
The subordination of purported debt to the claims of other
creditors weighs against a finding of bona fide debt. See Roth
Steel Tube Co. v. Commissioner, supra at 631-632; Stinnett’s
Pontiac Serv., Inc. v. Commissioner, supra at 639.
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