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any property” to which section 483 ordinarily could apply, no
portion of the sales price would be recharacterized as interest
under that section. See sec. 483(a), (c)(1) (although sec. 483
generally applies to payments made under any contract for the
sale or exchange of any property, it does not apply unless some
contract payments are due more than 1 year after the sale or
exchange). Similarly, if the deferred payment arrangement were a
“debt instrument given in consideration for the sale or exchange
of property” to which section 1274 ordinarily could apply, no
portion of the sales price would be recharacterized as original
issue discount (OID) under that section. See sec. 1274(c)(1)
(although sec. 1274 generally applies to any debt instrument
given in consideration for the sale or exchange of property, it
does not apply unless some payments under the debt instrument are
due more than 6 months after the date of the sale or exchange).
Petitioners assert that because no portion of the
$13,298,978 aggregate sales price would be recharacterized as
interest or OID under section 483 or 1274, the deferred payment
arrangement cannot be treated as a below-market loan subject to
section 7872. We disagree. In Frazee v. Commissioner, 98 T.C.
554 (1992), we considered the relationship of sections 483, 1274,
and 7872 for gift tax purposes and rejected arguments quite
similar to those made by petitioners in the case at hand.
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