- 11 -
Cordeses’ benefit. Below, we set forth additional findings of
fact specific to these purported transactions and their tax
consequences.
A. Loan Interest Allocation
Mr. Cordes lent $200,000 to CFC on August 20, 1991 (the
first $200,000 loan), and again on September 18, 1991 (the second
$200,000 loan) (collectively, the two $200,000 loans). CFC
repaid in full each of the two $200,000 loans by December 31,
1992. On December 31, 1992, CFC paid Mr. Cordes $80,000, by
check, as interest on the two $200,000 loans. The following day,
January 1, 1993, Mr. Cordes lent $80,000 to CFC (the $80,000
loan).9 CFC repaid in full the $80,000 loan by March 27, 1993.
On December 31, 1993, CFC paid Mr. Cordes $20,000 as interest on
the $80,000 loan. The record does not contain any evidence of
indebtedness reciting the terms of the two $200,000 loans or the
$80,000 loan.
CFC and the Cordeses treated the transfers from CFC to Mr.
Cordes of $80,000 and of $20,000 consistently as between
themselves; CFC reported them as deductible interest expenses on
its 1992 and 1993 Forms 1120, U.S. Corporation Income Tax Return,
respectively, and the Cordeses reported them as interest income
9Mr. Cordes made this loan of $80,000 to CFC by endorsing
the $80,000 check he had received as interest on the two $200,000
loans the day before and returning it to CFC.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011