- 13 -
to petitioners in 1991. Respondent's position is based on
the conference report accompanying the 1982 Act, which
states in pertinent part as follows:
if payments under a loan with a repayment period
of less than 5 years are not in fact made, so
that an amount remains payable at the end of 5
years, the amount remaining payable is treated as
if distributed at the end of the 5-year period.
* * * [H. Conf. Rept. 97-760, at 619 (1982),
1982-2 C.B. 600, 672.]
The above-quoted statement from the conference report sets
forth Congressional intent regarding the treatment of loans
that are subject to the 1982 Act, that is, loans made after
August 13, 1982. See H. Conf. Rept. 97-760, at 620 (1982),
1982-2 C.B. 600, 672. Based upon the conference report,
respondent treated the unpaid balance of the 1986 loans
as a taxable distribution in 1991, the end of the 5-year
period following the dates of the loans.
Petitioners concede that the 1986 loans must be
treated as taxable distributions, but argue that "the
entire balance of each loan became taxable to Petitioners
in taxable year 1987, at the latest." Petitioners reason
that the level amortization requirement contained in
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