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In her closing statement after the trial in this case,
respondent's counsel stated the position of respondent regarding
the investment interest issue presented here, as follows:
The issue as to the interest paid -- there has been
stipulation that the interest paid to correct the
prohibited transaction in excess of $268,000 -- it was
paid in 1991.
The facts are rather clear. I believe that it is
the Petitioner's argument -- I don't believe there is
any discussion about the facts -- that it is Peti-
tioner's legal argument that Code Section 72(p)(3)
simply does not apply to the repayment of interest in
1991.
That is a legal issue that the Respondent will be
happy to argue, but the facts on that issue are set
forth and clear. [Emphasis added.]
We construe the stipulation of respondent's counsel during
Mr. Harbison's direct testimony and her closing statement with
respect to the investment interest issue to mean that respondent
does not dispute (1) that the proceeds of the 1982 plan loan were
invested from June 4, 1982, when that loan was made, through
October 4, 1991, when petitioner made the 1991 principal payment
and the 1991 interest payment, and (2) that, consequently, the
1982 plan loan proceeds are traceable to an investment expendi-
ture throughout that period. On the record before us, we shall
not allow respondent to abandon on brief the position taken at
trial that the $130,000 proceeds of the 1982 plan loan were
"invested" and that the facts regarding the investment interest
issue are "clear". Consequently, we reject respondent's argument
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