Philip E. And Joan Bauer, Federal Meat Co. And Phillip and Ruth Himmelfarb v. Commissioner of Internal Revenue

HUG, Circuit Judge:

This case concerns a determination of whether cash payments by two stockholders to their wholly-owned corporation were loans or contributions to capital. The Commissioner of Internal Revenue contended that the payments by the stockholders were contributions to capital and not loans, as the stockholders and the corporation maintained. The documentation between the parties and the books of the corporation reflected the cash payments as loans and the periodic payments by the corporation as principal and interest payments to the stockholders. The corporation deducted the…