From 1987 to 2000 the shareholders made cash advances to the corporation in amounts ranging from $634,000 to $1.7 million that it reported as liabilities on its balance sheet.
This case emphasizes that shareholder advances to a closely held corporation will be treated as loans if the characteristics of the agreement are similar to those for loans made to the corporation by an unrelated party (For background information on the lack of guidance regarding debt vs.
(a) Advances to and discounts for a depository institution.
Emergency credit will be extended at a rate above the highest rate in effect for advances to depository institutions.
A Federal Reserve Bank may make or have outstanding advances to or discounts for a depository institution that it knows to be an undercapitalized insured depository institution, only:
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(For the facts of Indmar, see "Cash Advances to
a Corporation: Loan or Capital Contribution?" page 73.) It applied the 11-factor test set forth in Roth Steel Tube Co., 800 F2d 625 (6th Cir.
Commissioner, which held that advances to
an S corporation which were separate, closed transactions must be accounted for separately.