- 55 -
Court of Appeals for the Ninth Circuit considers seven factors to
determine whether a debtor-creditor relationship existed, with no
single factor being determinative.21 Welch v. Commissioner, supra
at 1230. The factors are: (1) Whether the promise to repay is
evidenced by a note or other instrument; (2) whether interest was
charged; (3) whether a fixed schedule for repayment was
established; (4) whether collateral was given to secure payment;
(5) whether repayments were made; (6) whether the borrower had a
reasonable prospect of repaying the loan and whether the lender
had sufficient funds to advance the loan; and (7) whether the
parties conducted themselves as if the transaction was a loan.
Id.
The Court will address the purported loans separately
beginning with the loans for the development and operation of the
Rivercliff property, followed by the loans for the purchase of the
Rivercliff property and the loans for petitioner’s family support
obligations.
A. The Rivercliff Property Development and Operating Loans
1. Whether the Promise To Repay Was Evidenced by a
Note or Other Instrument
A note or other instrument is indicative of a debtor-creditor
relationship. Teymourian v. Commissioner, T.C. Memo. 2005-232.
21 Because petitioner resides in the State of Oregon, absent
stipulation otherwise, an appeal of this case would go to the
U.S. Court of Appeals for the Ninth Circuit. See sec.
7482(b)(1)(A).
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