- 8 -
the value of the loan portfolio as determined under the competent
authority process.4
OPINION
Section 267(a)(1) generally disallows losses from the sale
or exchange of property between related parties, as defined in
section 267(b). If a loss is disallowed under section 267(a)(1),
subsection (d) generally provides a corresponding reduction in
the amount of any gain the related purchaser must recognize on a
subsequent resale of the property.5
4 In its letter to petitioner, the United States Competent
Authority stated:
The determination made by the competent authorities
results in improperly lodged funds in the U.S. to the extent
of the reduction in the transfer price (i.e., $76,355,304).
Since * * * [petitioner] and * * * [Standard Chartered-U.K.]
elect not to repatriate the funds, the $76,355,304 amount
will be treated as a contribution to the capital of * * *
[petitioner] by * * * [Standard Chartered-U.K.] during the
1984 taxable year.
5 Sec. 267(a) and (d) provides in pertinent part:
(a) In General.--
(1) Deduction for losses disallowed.--No deduction
shall be allowed in respect of any loss from the sale
or exchange of property * * *, directly or indirectly,
between persons specified in any of the paragraphs of
subsection (b).
* * * * * * *
(d) Amount of Gain Where Loss Previously Disallowed.--If–-
(1) in the case of a sale or exchange of property to
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011