Taiyo Hawaii Company, Ltd. - Page 20

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          National Alfalfa Dehydrating & Milling Co., 417 U.S. 134, 149               
          (1974):                                                                     
               that, while a taxpayer is free to organize his affairs                 
               as he chooses, nevertheless, once having done so he                    
               must accept the tax consequences of his choice, whether                
               contemplated or not, * * * and may not enjoy the                       
               benefit of some other route he might have chosen to                    
               follow but did not.  [Citations omitted.]                              
          See also Television Indus., Inc. v. Commissioner, 284 F.2d 322,             
          325 (2d Cir. 1960), affg. 32 T.C. 1297 (1959).                              
               Taxpayers have, however, been permitted to assert substance            
          over form in situations where their “tax reporting and other                
          actions have shown an honest and consistent respect for * * * the           
          substance of * * * [a transaction]".  FNMA v. Commissioner, 90              
          T.C. 405, 426 (1988) (citing Illinois Power Co. v. Commissioner,            
          87 T.C. 1417, 1430 (1986)), affd. 896 F.2d 580 (D.C. Cir. 1990).            
               Petitioner has, for all purposes, treated the advances as              
          loans and was instructed by its parent corporation to accrue                
          interest.  Under those circumstances, we reject petitioner's                
          approach of testing its own choice of form with traditional debt            
          versus equity considerations, such as the absence of a fixed                
          payment schedule, maturity dates, enforcement, or formal debt               
          instruments.10  We are likewise unpersuaded by petitioner's                 

               10  Petitioner, for example, relies on the following line of           
          cases.  Hardman v. United States, 827 F.2d 1409 (9th Cir. 1987);            
          Fin Hay Realty Co. v. United States, 398 F.2d 694 (3d Cir. 1968);           
          Dixie Dairies Corp. v. Commissioner, 74 T.C. 476 (1980); Nestle             
          Holdings, Inc. v. Commissioner, T.C. Memo. 1995-441; Green Leaf             
                                                             (continued...)           




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