Karns Prime & Fancy Food, Ltd. v. Commissioner

OPINION OF THE COURT

SLOVITER, Circuit Judge.

The distinction between a loan and an advance payment for the purpose of whether the funds received are to be treated as “income” subject to federal income tax is not always apparent on the face of the documents. Instead, the issue is to be determined after an examination of “all the facts and circumstances.” Comm’r v. Indianapolis Power & Light Co., 493 U.S. 203, 207, 110 S.Ct. 589, 107 L.Ed.2d 591 (1990) (internal citation and quotation marks omitted). The applicable law is not uncertain. It is “settled that receipt of a loan is not income to the…