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find that petitioner has failed to establish any nontax, business
purpose for the form of the Horbury transaction.
b. Whether the Interest Deductions
Claimed by Radcliffe and by BOT
Indicate a Tax Avoidance Purpose
for Any of the Transactions at Issue
(1) Bank Transactions
Respondent contends that an additional reason for the Bank
transactions was to generate interest deductions for Radcliffe
and for BOT for the years at issue that enabled them to avoid
Federal tax on their respective income. Petitioner counters that
interest deductions attributable to the loans at issue provided
little benefit to Radcliffe and BOT for certain years at issue
and no benefit for other years because those corporations would
have reported losses in their income tax returns for such other
years without taking account of the interest deductions claimed
with respect to those loans. He contends that, therefore, any
alleged tax benefit from the interest deductions claimed by those
corporations does not justify recharacterizing the Bank transac-
tions.99
99 Petitioner also argues that if it is respondent's position
that the Bank transactions had no purpose other than tax avoid-
ance, she should have disallowed the interest deductions claimed
by Radcliffe and by BOT with respect to those transactions. As
we indicated supra note 78, respondent is free to make whatever
determinations she chooses. Moreover, as we understand respon-
dent's position, she does not question that interest was paid by
Radcliffe and BOT; rather, it is her contention that, in sub-
stance, that interest was paid to the foreign corporations
pledging collateral, and not to the U.S. banks in question.
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