- 15 -
Regs., 60 Fed. Reg. 66234, 66236 (Dec. 21, 1995)
(emphasis added).]
Under this proposed regulation, petitioners contend,
the loans must be treated as distributions at the time
petitioner first failed to make a quarterly installment
payment. They further contend that such failure occurred
in "1987, at the latest."
We note at the outset that the above proposed
regulation has not been finalized. Moreover, even if the
proposed regulation were final, it would not, by its terms,
apply to the 1986 loans. See sec. 1.72(p)-1, Q&A-19,
Proposed Income Tax Regs. 63 Fed. Reg. 42, 47 (Jan. 2,
1998) (regulation applies to "loans made on or after the
date that is three months after the date of publication of
the final regulations in the Federal Register.") In any
event, as discussed below, we reject petitioners' threshold
contention that section 72(p)(2)(C) as added to the Code by
the 1986 Act is applicable to the 1986 loans. Therefore,
we need not address petitioners' contention regarding the
effect of the proposed regulation.
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