French E. Hickman and Janice C. Hickman - Page 23

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          The terms of the 1982 note evidencing the 1982 plan loan provide            
          no specific repayment date for the $130,000 of principal and                
          require interest to be paid annually at the rate of 15 percent              
          per year.  Accordingly, the 1982 plan loan is not a loan de-                
          scribed in section 72(p)(2).  On the instant record, we reject              
          respondent's argument that section 72(p)(3) disallows the inter-            
          est deductions at issue relating to the 1991 interest payment on            
          the 1982 plan loan.                                                         
               Based on our examination of the entire record presented to             
          us, we reject respondent's determinations and find that petition-           
          ers are entitled for the years at issue to interest deductions              
          under section 163(a), as limited by section 163(d), that are                
          attributable to the 1991 interest payment on the 1982 plan loan.            
          Section 6662(a)                                                             
               Section 6662(a) imposes an addition to tax equal to 20                 
          percent of the underpayment of tax attributable to, inter alia,             
          negligence or disregard of rules or regulations under section               
          6662(b)(1).8  For purposes of section 6662(a), the term "negli              


          8  Respondent made alternative determinations in the notice that,           
          assuming arguendo that the Court were not to find petitioners               
          liable for the years at issue under sec. 6662(a) because of their           
          negligence or disregard of rules or regulations under sec.                  
          6662(b)(1), they are liable under sec. 6662(a) for those years              
          because of substantial understatements of income tax under sec.             
          6662(b)(2).  On brief, respondent does not advance any arguments            
          in support of the alternative determinations under sec. 6662(a)             
          that were based on sec. 6662(b)(2).  We conclude that respondent            
          has abandoned the determinations under sec. 6662(a) that were               
                                                             (continued...)           




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