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compensation paid under section 83. We disagree. The existence
of OID is determined as of the date of issue of the investment
unit. Secs. 1273(b)(2), 1273(c)(2), 1275(a)(2)(B).
In support of the argument that it should be entitled to a
$3.069 million deduction for 1992 as loan fees with regard to the
$26 million loan, petitioner relies on cases where options were
issued as trade discounts in connection with long-term sales
contracts. See Computervision Intl. v. Commissioner, T.C. Memo.
1996-131; Convergent Techs., Inc. v. Commissioner, T.C. Memo.
1995-320; Sun Microsystems, Inc. v. Commissioner, T.C. Memo.
1993-467. Petitioner's reliance on these cases is misplaced.
The options in the instant case were not issued as trade
discounts but as part of a lending transaction. Further, the
cases cited do not involve loan fees or loan charges. No
credible evidence supports petitioner's claimed deduction for
loan fees.
Further, under section 83 only upon exercise of stock
options received for services rendered may a corporation claim
deductions for compensation paid. The options at issue herein
were not issued to FNBB in connection with services rendered.
The evidence does not support, for any of the years in
issue, petitioner’s claim to a deduction of $3.069 million for
OID, loan fees, or compensation paid under section 83 relating to
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