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transactions (i.e., executing documentation to reflect the resale
of the assets to SPC-SC and SPC-FL, arranging for the S
corporations to pay them so that they could in turn pay SSI, and
separately reporting items for income tax purposes at the
corporate and individual level). They argue that the result
would have been a wash and the entries would have offset each
other. Furthermore, petitioners contend that, although no
conveyancing documents were prepared to reflect the resale of the
assets to SPC-SC and SPC-FL, the transactions were evidenced by
journal entries on the books of the S corporations.24
Petitioners argue that none of the deficiencies of which
respondent complains negates the form of these transactions,
which has been stipulated.
Petitioners rely on Old Colony Trust Co. v. Commissioner,
279 U.S. 716 (1929), for the proposition that payments made on
behalf of or at the direction of a creditor to a third party are
the same as payments to the creditor and repayment over by the
creditor to the third party. In the same vein, petitioners
contend that they reported no interest income and claimed no
interest expense for amounts allegedly paid on their behalf by
the S corporations to SSI and SCNB because such income and
24 SPC-SC and SPC-FL each recorded the transaction as a debit
to assets and a credit to notes payable--seller.
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