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this argument, however, and we therefore do not
consider it.
Based on the above-quoted holding, we understand the Court
of Appeals’ remand to require this Court to provide further
explanation of our holding, with emphasis on the weight given to
petitioner’s treatment of repayments and interest accruals.
FINDINGS OF FACT
Findings in Earlier Opinion
In Cerand I, we found the following facts concerning the
interest accruals and repayments by petitioner’s three sister
corporations:
From time to time, the three corporations made cash
repayments, or book entry credit was made to the
advances for services rendered to petitioner. While
the corporations were viable, they repaid $414,220 to
petitioner. Petitioner accrued interest only
sporadically on the advances to two of the corporations
and failed to accrue any interest against the advances
to the third, contrary to the advice of Mr. Cerand’s
tax adviser. The interest that petitioner did accrue
on its books was rolled over annually into a note
receivable and reported as income by petitioner.
Because that income was never actually received by
petitioner, respondent has allowed a deduction against
ordinary income for that amount.
Additional Findings in Record That Support the Above-Quoted
Findings
Petitioner began advancing funds to its three sister
corporations in 1984 and over an 8-year period advanced
$1,413,374.17. One of the sister corporations had advances
outstanding for 8 years, and the other two each had advances
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