Hudson v. Commissioner

OPINION.

Raum, Judge:

Whether petitioner’s advances to H & K represented genuine loans rather than risk capital is open to serious question. The need for his advances was largely attributable to H.& K’s severe lack of working capital. No notes or other evidences of indebtedness were issued in respect of these advances, and H & K, which kept its books on an accrual basis, did not accrue any interest in petitioner’s favor in respect of these advances. It seems highly persuasive that the expectation of repayment was based only upon possible future earnings; and that petitioner was satisfied to let…