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the disallowance of the interest deductions claimed by MMP for
the same years.4 I note, without further comment, as does the
majority opinion (id.), that “respondent has ‘indicated that Ms.
Read has the better argument that she should not recognize any
gain from the sale of her stock pursuant to I.R.C. � 1041.’”
Second, about the procedural settings on appeal: An appeal
in Mrs. Read’s case would go to the Court of Appeals for the
Ninth Circuit; Mr. Read’s appeal would go to the Court of Appeals
for the Eleventh Circuit. Therefore, a whipsaw of respondent is
not out of the picture, irrespective of how we decide the cases
3(...continued)
that he is liable to dividend treatment on the subsequent years’
payments of interest and principal on the note for years
following the year the note was issued. Conceivably, the correct
approach would have been for respondent to treat the fair market
value of the note as a dividend distribution to him in the year
of issuance, see Maher v. Commissioner, 55 T.C. 441 (1970),
supplemented 56 T.C. 763 (1971), revd. and remanded 469 F.2d 225
(8th Cir. 1972); see also Bittker & Eustice, Federal Income
Taxation of Corporations and Shareholders, par. 8.23, (1999 Cum.
Supp. 1), a year for which the period of limitation on assessment
of a deficiency has expired. See also note 2 and accompanying
text of the joint dissenting opinion of Judges Laro and Marvel.
There is no occasion to comment on how that issue should be
decided if Mr. Read had raised it in a timely fashion.
4 It is understood that Mr. Read has not raised the point--
and it is not in issue in the cross-motions for partial summary
judgment before the Court--that if the corporate payments are to
be included in his gross income as constructive dividends, then
he is entitled to deduct the interest portion of the payments as
business interest. There is no occasion here to comment on this
point, other than to observe that, under the analysis of the
concurring opinion, the obligation to pay interest to Mrs. Read
would be the deemed obligation of Mr. Read, rather than that of
the corporation. Cf. Seymour v. Commissioner, 109 T.C. 279
(1997).
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