112 T.C. No. 6 UNITED STATES TAX COURT GIDEON L. MEDINA AND CORAZON P. MEDINA, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 18999-97. Filed February 22, 1999. H and W, who were both disqualified persons within the meaning of sec. 4975, I.R.C., borrowed $340,000 from the qualified pension plan of H's wholly owned corporation. H and W did not make any payments of interest or principal relating to the loan and did not file excise tax returns. 1. Held: Sec. 4975, I.R.C., applies to a loan, even though such loan, pursuant to sec. 72(p), I.R.C., was treated as a distribution. 2. Held, further, H and W did not correct, within the meaning of sec. 4975, I.R.C., the prohibited transaction and, pursuant to sec. 4975(a) and (b), I.R.C., are liable for both tiers of excise taxes. 3. Held, further, the "amount involved", on which the sec. 4975 excise taxes are based, is equal to the greater of interest paid or fair market interest relating to the loan. Because H and W did not make any payments of interest, the amount involved is the fair market interest.Page: 1 2 3 4 5 6 7 8 9 10 11 Next
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