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The quoted passage indicates that a corporation may be at risk
for amounts borrowed from its shareholders by reason of section
465(b)(3)(B)(ii). Yet we can find no legislative history
suggesting that the shareholders will be deemed at risk with
respect to such amounts by reason of that provision of the
statute.
Petitioners contend that if Congress intended the exception
of section 465(b)(3)(B)(ii) to apply only to corporations, i.e.,
only at the corporate level, it would have expressly provided
that the exception applied only for purposes of calculating
corporate-level at risk amounts. Petitioners further contend
that, because there is no express language in section
465(b)(3)(B)(ii) limiting its application only to corporations,
the statute should be construed to afford them relief. Indeed,
if the statute contained such language, our task would have been
simpler. The failure of the statute to contain such language,
however, does not persuade us that our interpretation is
incorrect.
6(...continued)
(other than as a creditor) in the activity or is
related to a person (other than the taxpayer) having
such an interest. However, the Act specifies that a
corporation may be considered at risk with respect to
amounts borrowed from its shareholders to finance
participation in an activity.
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Last modified: May 25, 2011