Investment Research Associates - Page 501




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          demonstrate that the transactions had any substance.  Respondent             
          further determined that the sales were to a related party and                
          were subject to section 267, which disallows losses between                  
          related parties.61                                                           
               As of June 24, 1985, IRA's general ledger reflected a note              
          receivable in the amount of $122,500 owing by Funding Systems.               
          It further reflected that, on that same date, IRA received                   
          payments, leaving a $91,988 balance due on the receivable.                   
               LBG Properties, Inc. (LBG), is a subsidiary of IRA.  IRA's              
          general ledger reflected that IRA had had a note receivable of               
          $39,500 owing by LBG.                                                        
               Sherwood Associates (the Sherwood partnership) is a                     
          partnership in which IRA was a partner.  IRA's general ledger                
          reflected that IRA had a note receivable of $47,925 owing by the             
          Sherwood partnership.                                                        
               Tanglewood Properties, Inc. (Tanglewood), is a subsidiary of            
          Holding Co.  Prior to 1981, Holding Co. had paid or transferred              
          $350,000 to Tanglewood.  On its books, Holding Co. recorded this             
          transaction as a note receivable owing by Tanglewood.  On or                 
          before August 31, 1981, IRA acquired the Tanglewood receivable               




          61                                                                           
               Respondent conceded the adjustments relating to the capital             
          losses claimed on the sales of stock of Brajda's, U.S. Mineral,              
          Composite Container, Modular Power, and Forenergy.  The remaining            
          adjustments are in dispute.                                                  





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