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seeking an imputed dividend from the Petitioners." Petitioners
misconstrue the manner in which the transaction is viewed under
section 7872. As mentioned above, the statute treats a below-
market loan as a transfer from the lender to the borrower of an
amount equal to the forgone interest, and a retransfer of such
amount from the borrower to the lender as interest. Sec.
7872(a)(1). Pursuant to that treatment, petitioners have
received increased itemized deductions for interest to the extent
allowed by rules governing such deductions, and forgone interest
was included in income by RSI. It is integral to the statutory
scheme that petitioners also recognize the amount of forgone
interest as dividend income.
Finally, it is true that, in 1990, KPMG determined the
correct amount of interest that should have accrued on the debt
in order to have avoided the application of section 7872.
However, it is well established that a transaction is to be given
effect in accordance with what actually occurred, not with what
might have taken place under different circumstances.
Commissioner v. National Alfalfa Dehydrating & Milling Co., 417
U.S. 134, 148 (1974). Taxpayers are bound by the form of the
transaction they chose and must accept the tax consequences of
their choice. Id. at 149; Bradley v. United States, 730 F.2d
718, 720 (11th Cir. 1984). Since petitioners structured the
loans without stated interest during 1987 and 1988, they may not
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