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Issue 2. Investment Interest
Respondent determined that petitioners were not entitled to
deductions for investment interest claimed to have been paid to
Drachman for the shares of Price Co. stock transferred to
petitioners on October 30 and December 10, 1987. Petitioners
stipulated that they would not be entitled to claim these
deductions if we found the shares of stock were not bona fide
loans. We have so found.6
In addition, there is no evidence to support that any of the
claimed interest was ever paid. Respondent is sustained on this
issue.
Issue 3. Addition to Tax Under Section 6651(a)
Respondent determined an addition to tax under section
6651(a) for delinquent filing of a return.
Section 6651(a) provides that if a taxpayer fails to file a
return by its due date, including extensions of time for filing,
there shall be an addition to tax equal to 5 percent of the tax
required to be shown on the return for each month the failure to
file continues, not to exceed 25 percent. The addition to tax
under section 6651(a) shall not apply, however, if the taxpayer
6 The parties stipulated that for 1990 petitioners
claimed $22,800 as investment interest paid to Drachman for the
transferred shares of Price Co. stock. On brief, respondent
argues that petitioners are not entitled to claim $20,754 as
investment interest paid to Drachman in 1990. We hold this
$2,046 difference to be a concession by respondent.
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