-64-
We do not know whether decedent had any creditors. Given
that the “loans” from the LRFLP were unsecured, however, the
right of the LRFLP to repayment would have been subordinate to
the interests of any secured creditors.
This factor is either inapplicable or does not support a
finding that decedent’s use of the funds of the LRFLP created
bona fide debt.
x. Use of Funds
A transfer of funds to meet the transferee’s daily needs
weighs toward a finding of debt. See Roth Steel Tube Co. v.
Commissioner, supra at 632; Stinnett’s Pontiac Serv., Inc. v.
Commissioner, supra at 640.
Decedent’s daughter (as decedent’s attorney-in-fact) used
the funds of the LRFLP to meet decedent’s daily needs. But for
those funds, those needs most likely would have gone unsatisfied.
This factor weighs toward a finding that decedent’s use of
the funds of the LRFLP did not create bona fide debt or, at best
for petitioners, is irrelevant.
xi. Presence or Absence of a Sinking Fund
The failure to establish a sinking fund for repayment weighs
against a finding of bona fide debt. See Roth Steel Tube Co. v.
Commissioner, supra at 632; Lane v. United States, 742 F.2d at
1317.
Page: Previous 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 NextLast modified: May 25, 2011