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the disputed amount was a disguised payment for the concession,
petitioner argues that the 7.5-percent interest payment was a
“sufficient” payment for tax purposes. Petitioner states that,
if the $179 million payment were regarded simply as an
undifferentiated lump-sum payment for property (“which”,
petitioner argues, “strictly speaking, it is”), “the amount of
interest included in the lump sum would be determined, for tax
purposes, by section 483.” Petitioner states that the applicable
section 483 rate was 7 percent a year compounded semiannually,
which, petitioner claims, is below the interest rate that gives
rise to the 7.5-percent interest payment. Thus, petitioner
concludes, “the interest income attributable to the Award’s 7.5%
rate, which petitioners reported in their 1982 return * * * , was
more than sufficient to meet the standard of section 483.”
Section 483 imputes interest (unstated interest) to a
contract for the sale or exchange of property for which there is
inadequate stated interest. Section 1.483-1(b)(1), Income Tax
Regs., provides: “The term ‘sale or exchange’ includes any
transaction treated as a sale or exchange for purposes of the
Code.” Condemnation proceedings are treated as sales for
Federal income tax purposes. See Hawaiian Gas Prods., Ltd. v.
Commissioner, 126 F.2d 4 (9th Cir. 1942), affg. 43 B.T.A. 655
(1941); cf. Helvering v. Hammel, 311 U.S. 504 (1941).
Apparently, petitioner accepts that section 483 applies to the
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