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indirectly, between persons specified in any of the
paragraphs of subsection (b). * * *
Section 267(b)(3) specifies as persons for whom a loss will be
disallowed:
Two corporations which are members of the same
controlled group (as defined in subsection (f));
Section 267(f)(1) incorporates the provisions of section 1563(a),
which defines a controlled group as a group of corporations, each
owned more than 50 percent, in voting power or value, by a common
parent corporation, or five or fewer individuals. In this case,
the same individual owned 100 percent of both petitioner and
Realty, and thus petitioner and Realty were members of a
controlled group. Sec. 267(b)(3), (f)(1). The $3,325 loss arose
from a sale or exchange of property. The plain language of the
statute does not allow petitioner's loss. Petitioner's argument
that there is no evidence of collusion on the sale is simply
irrelevant.
Insurance Premiums
Section 264(a)(1) provides that no deduction shall be
allowed for:
Premiums paid on any life insurance policy covering the
life of any officer or employee, or of any person
financially interested in any trade or business carried
on by the taxpayer, when the taxpayer is directly or
indirectly a beneficiary under such policy.
Here, the insurance policy covered the life of the principal
officer and shareholder of petitioner. Since petitioner was the
beneficiary of the policy, the payment of the premiums may not be
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Last modified: May 25, 2011