113 T.C. No. 28
UNITED STATES TAX COURT
ROUNTREE COTTON CO., INC., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 24014-97. Filed December 16, 1999.
R determined that C made below-market-interest
loans directly and indirectly to C’s shareholders
within the meaning of sec. 7872, I.R.C. The “indirect”
loans were to entities owned in part by C’s
shareholders. C contends that sec. 7872, I.R.C., was
not intended to apply to a loan by C to a shareholder
of C who does not have a majority or controlling
interest in C. C also contends that sec. 7872, I.R.C.,
does not apply to a loan by C to an entity in which no
shareholder of C individually holds a controlling or
majority interest. R contends that the below-market-
interest loans to entities were all made indirectly to
C’s shareholders. All of C’s shareholders were members
of the same family, and each of the entities was owned
entirely by members of that family, although some of
them were not shareholders of C. R argues that sec.
7872, I.R.C., does not require that C’s shareholders
have a majority or controlling interest in the entities
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