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S. Rept. 1983, 85th Cong., 2d Sess. (1958), 1958-3 C.B. 922,
1141. We have construed the term "investment", as used in
section 1366(d)(1)(B), to mean actual economic outlay of the
shareholder in question. Hitchins v. Commissioner, 103 T.C. 711,
715 (1994); Estate of Leavitt v. Commissioner, 90 T.C. 206, 217
(1988), affd. 875 F.2d 420 (4th Cir. 1989); Perry v.
Commissioner, 54 T.C. 1293, 1296 (1970).
Additionally, within the meaning of section 1366(d)(1)(B), a
shareholder has basis in a debt owed to him by his corporation
only when the debt runs directly from the S corporation to the
shareholder. Prashker v. Commissioner, 59 T.C. 172, 176 (1972);
Raynor v. Commissioner, 50 T.C. 762, 770-771 (1968). In Raynor,
we stated:
No form of indirect borrowing, be it guaranty, surety,
accommodation, comaking or otherwise, gives rise to
indebtedness from the corporation to the shareholders
until and unless the shareholders pay part or all of
the obligation.
Id.
Basis Issues
A. Promissory Notes
Petitioners contend that they have basis, within the meaning
of section 1366(d)(1)(B), in the indebtedness incurred by the
corporations to them in the transactions through which
petitioners acquired assets from SSI and subsequently conveyed
such assets to SPC-SC and SPC-FL. Despite the stipulated form of
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