Claymont Investments, Inc., As Successor in Interest to New CCI, Inc. and Subsidiaries - Page 17

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          Bausch & Lomb, Inc. v. Commissioner, 92 T.C. 525, 582 (1989),               
          affd. 933 F.2d 1084 (2d Cir. 1991).                                         
               A.   The Applicability of Section 1.482-2(a)(1), Income Tax            
                    Regs., to the Holdings/CIC Transaction or CIC/CIHI                
                    Transaction                                                       
               Section 482 allows the Commissioner to make adjustments to             
          reflect an arm’s-length rate of interest “Where one member of a             
          group of controlled entities makes a loan or advance * * * or               
          otherwise becomes a creditor of, another member of such group and           
          * * * charges interest at a rate which is not equal to an arm’s             
          length rate of interest”.  Sec. 1.482-2(a)(1)(i), Income Tax                
          Regs.; Latham Park Manor, Inc. v. Commissioner, 69 T.C. 199, 210-           
          211 (1977), affd. without published opinion 618 F.2d 100 (4th               
          Cir. 1980).                                                                 
               Section 1.482-1(i)(7), Income Tax Regs., broadly defines a             
          transaction as “any sale, assignment, lease, license, loan,                 
          advance, contribution, or any other transfer of any interest in             
          or a right to use any property * * * or money”.  Because the                
          Holdings/CIC transaction was a loan and CIC/CIHI transaction                
          involved a transfer of an “interest in or a right to use * * *              
          money”, both transactions meet that definition.  The Holdings/CIC           
          and CIC/CIHI transactions, however, are separate transactions.              
          The CIC/CIHI transaction was entered into 8 years after the                 
          Holdings/CIC transaction, and there is no evidence that this                
          transaction was under consideration at the time Holdings lent the           





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