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not result in the repayment of principal or interest. Therefore,
petitioners did not correct the prohibited transaction, and the
taxable period ended on June 25, 1997, the date respondent mailed
the notice of deficiency. Accordingly, petitioners are liable
for both tiers of section 4975 excise taxes.
III. Amount Involved
Section 4975 excise taxes are imposed on the "amount
involved" relating to the prohibited transaction. Sec. 4975(a)
and (b). This section states that the "amount involved" is the
"greater of the amount of money and the fair market value of the
other property given or the amount of money and the fair market
value of the other property received". Sec. 4975(f)(4). Where
the use of money is involved (i.e., a loan), the regulations
define the "amount involved" as the "greater of the amount paid
for such use or the fair market value of such use". Sec.
53.4941(e)-1(b)(2)(ii), Foundation Excise Tax Regs.; see also id.
subpar. (4), Example (2). See generally sec. 141.4975-13,
Temporary Excise Tax Regs., 41 Fed. Reg. 32890 (Aug. 5, 1976) and
51 Fed. Reg. 16305 (May 2, 1986) (providing that the Foundation
Excise Tax Regulations define the term "amount involved" for
purposes of section 4975 until permanent regulations under
section 4975 are promulgated).
Petitioners contend that the "amount involved" relating to a
loan is the greater of the interest paid or the fair market
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