Security State Bank - Page 9

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          application to loans made by banks in the ordinary course of                
          business, regardless of whether the loans are characterized as              
          generating interest or original issue discount.4  We, therefore,            
          hold that section 1281(a)(1) does not apply to the loans in                 
          issue.                                                                      

                                                  Decision will be entered            
                                             for petitioner.                          


























               4Because of our legal conclusion, there is no need to decide           
          whether respondent is correct in characterizing the loans in                
          issue as generating original issue discount.                                




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Last modified: May 25, 2011