10
In the ruling [Rev. Rul. 75-144] the obligee on the
shareholder's note was an outsider, a bank, which stood
ready to enforce the obligation. Hence it was clear at
the time the substitution occurred that at some future
date payment would be required. Here, by contrast, the
obligee on the taxpayers' demand note was their own
wholly-owned corporation. * * * [Underwood v.
Commissioner, 535 F.2d at 312 n.2.5]
Petitioners contend that our approach to cases involving
factual situations, such as is involved herein, unjustifiably
singles out closely held S corporations for adverse tax
treatment. We recognize that the decided cases seem to place a
heavy burden on shareholders who seek to rearrange the
indebtedness of related closely held S corporations. But close
scrutiny of transactions between taxpayers and their controlled
corporations has been the order of the day for a long period of
time and applied in a myriad of tax cases too numerous to cite.
Having noted the significance of the close relationship where S
corporations are involved, we hasten to add that the existence of
such a relationship is not necessarily fatal if other elements
are present which clearly establish the bona fides of the
transactions and their economic impact. See Hitchins v.
Commissioner, 103 T.C. at 7186; see also Looney, "TAM 9403003:
5 See also Gilday v. Commissioner, T.C. Memo. 1982-242. We note
that, in any event, revenue rulings are not entitled to any
special deference. E.g., Underwood v. Commissioner, 535 F.2d
309, 312 n.2 (5th Cir. 1976), affg. 63 T.C. 468 (1975);
Halliburton Co. v. Commissioner, 100 T.C. 216, 232 (1993), affd.
without published opinion 25 F.3d 1043 (5th Cir. 1994).
6 We note that in Hitchins v. Commissioner, 103 T.C. 711 (1994),
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011