Opinion ID: 2973623
Heading Depth: 3
Heading Rank: 4

Heading: The Tax Court Committed Clear Error

Text: To summarize, eight of the eleven Roth Steel factors favor debt. The three remaining factors suggest the advances were equity, but, as we explained above, two of the factors – the absence of a fixed maturity date and schedule of payments and the absence of a sinking fund – deserve little weight under the facts of this case. Moreover, the non-Roth Steel factor relied upon by the Tax Court – Indmar’s failure to pay dividends – has questionable relevance to our inquiry. The only factor weighing in favor of equity with any real6 significance – the lack of security – does not outweigh all of the other factors in favor of debt. Accordingly, the trial evidence, when reviewed as a whole, conclusively shows that the Rowes’ advances to Indmar were bona fide loans. The Tax Court committed clear error in finding otherwise.