Ralf Zacky - Page 13

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          a “prohibited transaction” under section 4975(c)(1)(B), (D), and            
          (E), and none of these loans is exempted from that definition by            
          section 4975(d).  Under section 4975(c)(1)(B), the plan’s lending           
          of money to petitioner or to Inland was a “direct or indirect * *           
          * lending of money * * * between a plan and a disqualified                  
          person”.  Under section 4975(c)(1)(D), each of the three loans              
          also was a “direct or indirect * * * transfer to, or use by or              
          for the benefit of, a disqualified person of the income or assets           
          of a plan”.3  See O’Malley v. Commissioner, 96 T.C. 644, 651-652            
          (1991), affd. 972 F.2d 150 (7th Cir. 1992).  Under section                  
          4975(c)(1)(E), each of the three loans also was a direct or                 
          indirect “act by a disqualified person who is a fiduciary whereby           
          he deals with the income or assets of a plan in his own interest            
          or for his own account”.  Cf. Greenlee v. Commissioner, T.C.                
          Memo. 1996-378; Gilliam v. Edwards, 492 F. Supp. 1255, 1263                 
          (D.N.J. 1980).                                                              
               Petitioner aims to avoid an application of section 4975(a)             
          by advancing his five assertions set forth above.  Petitioner’s             
          reliance on these assertions is misplaced.  First, petitioner               
          asserts incorrectly that because each of the three loans was                


               3 Specifically, the three loans benefited petitioner in that           
          he used the first loan to pay the payroll of his wholly owned               
          corporation Aspects, he caused the second loan to pay his                   
          personal car payment, and he caused the third loan to pay the               
          mortgage and payroll taxes on the building owned by a second                
          wholly owned corporation, Inland.                                           





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