KTA-Tator, Inc. v. Commissioner
United States Tax Court
P, a closely held corporation, advanced funds to its shareholders. The advances were used to pay expenses relating to construction projects and were not subject to written repayment terms. After each project was completed, amortization schedules were prepared and the shareholders began repaying the advances. Prior to the shareholder's repayments, P did not report interest income from the advances.
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P, a closely held corporation, advanced funds to its shareholders. The advances were used to pay expenses relating to construction projects and were not subject to written repayment terms. After each project was completed, amortization schedules were prepared and the shareholders began repaying the advances. Prior to the shareholder's repayments, P did not report interest income from the advances. HELD: P, pursuant to sec. 7872, I.R.C., has interest income from below-market demand loans it made to its shareholders.
1Opinion of the Court
OPINION
Foley, Judge:
By notice dated September 27, 1995, respondent determined deficiencies in petitioner’s Federal income taxes as follows:
Year Deficiency
1992 . $10,443
1993 . 1,828
Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. The issue for decision is whether petitioner, pursuant to section 7872, has interest income from loans it made to its shareholders. We hold that it does.
Background
The facts have been fully stipulated under Rule 122 and are…
2Cases cited7 opinions
- Electric & Neon, Inc. v. CommissionerUnited States Tax Court · 1971
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- F. W. Woolworth Co. v. CommissionerUnited States Tax Court · 1970
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- Dorance D. And Helen A. Bolton v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1982
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