Milo G. and Sarah E. Chapman, et al. - Page 16

                                                - 16 -                                                   
                  Respondent does not dispute the form in which petitioners                              
            have cast the loans in question.  Instead, respondent argues that                            
            the Chapmans and the Christies have failed to recognize the                                  
            income tax consequences flowing from the corporate and plan                                  
            loans.  Accordingly, we must decide whether petitioners should be                            
            permitted to repudiate the loans from the Plan to the Chapmans                               
            and the Christies and the loans from Milo Chapman and David                                  
            Christie to the corporations.                                                                
                  A taxpayer's ability to disavow the form it has chosen for a                           
            transaction is circumscribed.  Illinois Power Co. v.                                         
            Commissioner, 87 T.C. 1417, 1430 (1986); Bolger v. Commissioner,                             
            59 T.C. 760, 767 n.4 (1973).  The Supreme Court has observed                                 
            repeatedly that "while a taxpayer is free to organize his affairs                            
            as he chooses, nevertheless, once having done so, he must accept                             
            the tax consequences of his choice, whether contemplated or not *                            
            * * and may not enjoy the benefit of some other route he might                               
            have chosen to follow but did not."  Central Tablet Manufacturing                            
            Co. v. United States, 417 U.S. 673, 690 (1974); Commissioner v.                              
            National Alfalfa Dehydrating & Milling Co., 417 U.S. 134, 148-149                            
            (1974).  It would be quite intolerable to pyramid the existing                               
            complexities of tax law by a rule that the tax shall be that                                 
            resulting from the form of transaction taxpayers have chosen or                              
            from any other form they might have chosen, whichever is less.                               
            Television Indus., Inc. v. Commissioner, 284 F.2d 322, 325 (2d                               
            Cir. 1960), affg. 32 T.C. 1297 (1959).                                                       




Page:  Previous  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  Next

Last modified: May 25, 2011