The essential fact in this case, the Court continues, is the absence of written evidence of a valid and enforceable obligation to repay by one of the companies in question that received advances from Corp. There was no written evidence of an enforceable obligation between Corp and one of the companies, much less a provision for a fixed maturity or a fixed interest rate. The transfers simply did not result in a reasonable expectation or an enforceable repayment obligation. For these reasons, the Court found that the relationship between the taxpayer and Corp. and the three companies was not that of the creditor and the debtor, and the Court found that Corp`s advances were essentially equity and that the IRS had properly prohibited the deduction. Although The Corp Journal records contained notes that referred to some of their advances to the companies as “loans,” neither the taxpayer nor Corp provided notes, agreements or other documents proving business loans. Intent Taxpayer testified that the intention of both parties was that it was a loan and that there would be no profit sharing, that interest would be paid and that only interest would be paid and that capital and principal would be repaid. There was, Taxpayer said, an agreement between the parties for the borrower to reserve the advances in the form of borrowed money and the lender would reserve them in the form of borrowed money; and in agreement with that, the taxpayer offered Corp`s newspaper articles, which characterized some loan advances. If an external lender had not lent funds to a business on the same terms as an insider, it appears that the advance is not a good faith loan; In other words, would an independent external party have advanced means in similar circumstances? The personal loan form is a legal document signed by two people ready to make a credit transaction. This loan form documents written proof of the terms and conditions between the two individuals, namely.dem lender and borrower. In the absence of immediate evidence of intent, the nature of the concentration can be inferred from its objective characteristics. In that case, the Court continues, no loans were documented.
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