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lies in its being readily valued. Unless the initial capital
contribution made to the finance subsidiary is susceptible of
ready valuation, the subsidiary’s debt/equity ratio cannot be
computed. Thus, in concluding that the parent’s stock can be
substituted for cash as the initial paid-in capital, the ruling
states:
Since * * * [the parent’s] common stock is daily
traded on the stock exchange, it has a readily
ascertainable value. Therefore, it is immaterial
whether cash or the common stock of * * * [the parent]
is contributed to * * * [the finance subsidiary].
Accordingly, the holdings in Revenue Ruling 69-377
are equally applicable in the instant case. [Id.,
1972-2 C.B. at 592; emphasis added.]
Rev. Rul. 69-501, 1969-2 C.B. 233, adds little to
respondent’s case. From the standpoint of economic substance,
the bank-loop transaction sanctioned in that ruling is a curious
one. Cash borrowed from a bank was redeposited with the same
bank. Presumably this circular flow of cash within the same
financial institution reduced the parent’s cost for the capital
contribution effected thereby to the spread between the interest
rate charged for the loan and the rate paid out for the deposit.
(The ruling does not address whether the finance subsidiary
received interest on the deposit or, if so, whether the
subsidiary retained it.) While the equity capital in Rev. Rul.
69-501, supra, consisting of an unrestricted claim to a third-
party bank deposit, contains more substance than that of the
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