French E. Hickman and Janice C. Hickman - Page 16

                                       - 16 -                                         

               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           





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