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The proposed regulation recognizes that a loan may
continue to be an enforceable obligation and continue
to accrue interest after it is treated as a distribution
under section 72(p). Nevertheless, under the proposed
regulation, once the loan is treated as a distribution,
it ceases to have the characteristics of a loan for
section 72(p) purposes. Thus, unpaid interest that accrues
after the date the loan is treated as a distribution is not
treated as an additional distribution to the borrower.
We note that a proposed regulation carries no more
weight than a position advanced by the Commissioner on
brief. See Hospital Corp. of Am. v. Commissioner, 109 T.C.
21, 53 n.40 (1997); KTA-Tator, Inc. v. Commissioner, 108
T.C. 100, 102-103 (1997); Frazee v. Commissioner, 98 T.C.
554, 582 (1992); Zinniel v. Commissioner, 89 T.C. 357, 369
(1987); F.W. Woolworth Co. v. Commissioner, 54 T.C. 1233,
1265-1266 (1970). Nonetheless, we find that respondent's
position in the proposed regulation makes more sense than
the respondent's litigating position in this case.
Respondent's litigating position is logically inconsistent
to the extent that it continues to treat the loan as
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