- 9 -
In these circumstances, we believe that respondent's
position that the loans fall within the ambit of section 482 had
a reasonable basis in law and fact, especially given the nature
of the relationship of the companies and the subsequent
forgiveness of interest.
Petitioners argue the loans were not bona fide
indebtedness, but were mere transfers between the companies, and
that the notes were simply used to keep track of what was being
transferred between these companies. Petitioners further argue
that because the transfers were not bona fide indebtedness,
section 482 was inapplicable. In support of their argument,
petitioners point out that there were no maturity dates on the
notes and no repayment schedule.
Regardless of whether respondent was correct in classifying
the loans as bona fide indebtedness, we believe respondent was
substantially justified in so doing. The record indicates that
for several years, petitioners made payments on the notes, and
kept a schedule of these payments. When petitioners assigned
the notes, they took great care to do it formally by documenting
the notices to the debtors. Moreover, petitioners treated the
loan from Marco Oil to RAM Drilling as a "Notes Payable"
liability when they valued RAM Drilling for purposes of their
liquidating distribution from TMC Resources in 1983.
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011