- 9 - make the Chef-Reddy payments is the kind of promise to pay that is frequently transferred to lenders or investors at a discount not substantially greater than the generally prevailing premium for the use of money. We therefore find that the obligation to make the Chef-Reddy payments is not the equivalent of cash. C. Cottage Sav. Association v. Commissioner Petitioners attempt to buttress their argument by citing Cottage Sav. Association v. Commissioner, 499 U.S. 554 (1991) (exchange of property gives rise to a realization event under section 1001 so long as the exchanged properties are “materially different”; i.e., so long as they embody a legally distinct entitlement). Petitioners argue that, when Larry Monico “exchanged the account receivable for the promissory note, the Petitioners realized and should have recognized income.” Petitioners have failed to prove that there was any such exchange. Moreover, they have failed to prove any material change in the obligation. Cottage Savings Association is inapplicable. II. Conclusion Petitioners have failed to prove that the Chef-Reddy payments constitute a return of capital. That being the exclusive basis on which they assigned error to respondent’s determination of a deficiency with respect to the Chef-ReddyPage: Previous 1 2 3 4 5 6 7 8 9 10 Next
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