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taxpayer must in other contexts accept the tax consequences of
the way in which he deliberately chose to cast his transaction,’
the determination of whether advances to a corporation are loans
or equity contributions depends on the ‘economic reality for the
year at issue.’” Id. (quoting Georgia-Pacific Corp. v.
Commissioner, 63 T.C. 790, 795 (1975)). LDS, Inc. v.
Commissioner, supra, thus in actuality reaffirms that where, as
here, the characterization of advances to a corporation as debt
or equity is not at issue, taxpayers are typically bound by form
and labels.
Having determined that petitioners are seeking to make a
substance over form argument, we turn to the question of whether
they should be permitted to do so. We consider the circumstances
of these cases in light of the aforementioned factors.
With respect to tax return treatment, petitioners reported
the special commissions as “Other income” on their Forms 1040.
If any explanation which went beyond simply identifying FIL as
the payer was included on the attached statements, the
description so given was “commission income”. A commission is
generally defined as “a fee paid to an agent or employee for
transacting a piece of business or performing a service”.
Webster’s Third New International Dictionary 457 (1976).
Conversely, petitioners never reported the income on the line of
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