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Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the years in issue and Rule
references are to the Tax Court Rules of Practice and Procedure.
TABLE OF CONTENTS
I. FINDINGS OF FACT ..................... 4
A. Petitioners ..................... 4
B. LTL ......................... 5
C. Growth of Petitioners and Their Subsidiaries ... 11
D. LIIBV ....................... 15
E. LTL's Purchase of GSX ............... 20
F. LTI's Centralized Cash Management Program (CCMP) . 24
G. The Advances at Issue ............... 25
H. Petitioners' Financial Condition ......... 44
I. Bank Loans . . . . . . . . . . . . . . . . . . . . 48
J. Comparison of Terms Governing Advances from LIIBV and
Bank Loans . . . . . . . . . . . . . . . . . . . . . 50
K. Audit of LTL by Canadian Tax Authorities. . . . . . 52
II. OPINION ........................ 52
A. Contentions of the Parties ............ 52
B. Loans vs. Capital Contributions .......... 53
C. Substance vs. Form ................ 54
D. The Mixon Factors ................. 58
E. Other Factors ................... 81
F. Conclusion .................... 83
I. FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
A. Petitioners
Petitioners LTI and LII are U.S. corporations the principal
places of business of which were in Hurst, Texas, when they filed
their petitions.
LTL, a Canadian corporation, owned all of the stock of LTI
during the years in issue. LTI was a holding company for U.S.
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Last modified: May 25, 2011