Sec. 385. Treatment of certain interests in corporations as stock
        or indebtedness
    (a) Authority to prescribe regulations
      The Secretary is authorized to prescribe such regulations as may
    be necessary or appropriate to determine whether an interest in a
    corporation is to be treated for purposes of this title as stock or
    indebtedness (or as in part stock and in part indebtedness).
    (b) Factors
      The regulations prescribed under this section shall set forth
    factors which are to be taken into account in determining with
    respect to a particular factual situation whether a debtor-creditor
    relationship exists or a corporation-shareholder relationship
    exists.  The factors so set forth in the regulations may include
    among other factors:
        (1) whether there is a written unconditional promise to pay on
      demand or on a specified date a sum certain in money in return
      for an adequate consideration in money or money's worth, and to
      pay a fixed rate of interest,
        (2) whether there is subordination to or preference over any
      indebtedness of the corporation,
        (3) the ratio of debt to equity of the corporation,
        (4) whether there is convertibility into the stock of the
      corporation, and
        (5) the relationship between holdings of stock in the
      corporation and holdings of the interest in question.
    (c) Effect of classification by issuer
      (1) In general
        The characterization (as of the time of issuance) by the issuer
      as to whether an interest in a corporation is stock or
      indebtedness shall be binding on such issuer and on all holders
      of such interest (but shall not be binding on the Secretary).
      (2) Notification of inconsistent treatment
        Except as provided in regulations, paragraph (1) shall not
      apply to any holder of an interest if such holder on his return
      discloses that he is treating such interest in a manner
      inconsistent with the characterization referred to in paragraph
      (3) Regulations
        The Secretary is authorized to require such information as the
      Secretary determines to be necessary to carry out the provisions
      of this subsection.