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interest. Respondent contends that the amount involved is the
greater of the "interest actually charged" (i.e., the 10.5-
percent stated interest rate) or the fair market interest.
Respondent relies on Thoburn v. Commissioner, 95 T.C. 132, 139
(1990), and Janpol v. Commissioner, 101 T.C. 518, 529 (1993), as
support for this contention. In Thoburn, the Court paraphrased
the regulations' "amount paid" language as "interest actually
charged". See Thoburn v. Commissioner, supra at 139. The
Court's statement is dicta. In Janpol, the Court repeated this
statement without discussion or necessity. See Janpol v.
Commissioner, supra at 529. In these cases, it is not clear
whether "interest actually charged" means interest stated,
billed, or paid.
We hold that, in the case of a loan, the "amount involved"
is the greater of the interest paid or the fair market value of
the use of the loan proceeds. Our holding and the Treasury
regulations are consistent with the statute's express language.
The statute refers to the greater of "money and * * * other
property given" or "money and * * * other property received".
See sec. 4975(f)(4). In the case of a loan, the money "given"
and "received" is the interest paid by one party and received by
the other. "Interest actually charged" can be interpreted as the
stated or billed interest, and such interest is not, necessarily,
"given" or "received".
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