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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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